Correlation Between Cummins and Quanta Services
Can any of the company-specific risk be diversified away by investing in both Cummins and Quanta Services at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Cummins and Quanta Services into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cummins and Quanta Services, you can compare the effects of market volatilities on Cummins and Quanta Services and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Cummins with a short position of Quanta Services. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cummins and Quanta Services.
Diversification Opportunities for Cummins and Quanta Services
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cummins and Quanta is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Cummins and Quanta Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quanta Services and Cummins is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Cummins are associated (or correlated) with Quanta Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quanta Services has no effect on the direction of Cummins i.e., Cummins and Quanta Services go up and down completely randomly.
Pair Corralation between Cummins and Quanta Services
Considering the 90-day investment horizon Cummins is expected to generate 0.88 times more return on investment than Quanta Services. However, Cummins is 1.14 times less risky than Quanta Services. It trades about 0.14 of its potential returns per unit of risk. Quanta Services is currently generating about 0.1 per unit of risk. If you would invest 39,220 in Cummins on August 21, 2025 and sell it today you would earn a total of 6,378 from holding Cummins or generate 16.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cummins vs. Quanta Services
Performance |
| Timeline |
| Cummins |
| Quanta Services |
Cummins and Quanta Services Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cummins and Quanta Services
The main advantage of trading using opposite Cummins and Quanta Services positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cummins position performs unexpectedly, Quanta Services can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Quanta Services will offset losses from the drop in Quanta Services' long position.| Cummins vs. Illinois Tool Works | Cummins vs. Canadian National Railway | Cummins vs. Roper Technologies, | Cummins vs. FedEx |
| Quanta Services vs. Vertiv Holdings Co | Quanta Services vs. CSX Corporation | Quanta Services vs. Johnson Controls International | Quanta Services vs. Transdigm Group Incorporated |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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