Correlation Between Bowlin Travel and MYR

Can any of the company-specific risk be diversified away by investing in both Bowlin Travel and MYR 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 Bowlin Travel and MYR into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bowlin Travel Centers and MYR Group, you can compare the effects of market volatilities on Bowlin Travel and MYR 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 Bowlin Travel with a short position of MYR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bowlin Travel and MYR.

Diversification Opportunities for Bowlin Travel and MYR

-0.43

Correlation Coefficient

Bowlin Travel  MYR

Very good diversification

The 3 months correlation between Bowlin and MYR is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Bowlin Travel Centers and MYR Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MYR Group and Bowlin Travel 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 Bowlin Travel Centers are associated (or correlated) with MYR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MYR Group has no effect on the direction of Bowlin Travel i.e., Bowlin Travel and MYR go up and down completely randomly.

Pair Corralation between Bowlin Travel and MYR

Given the investment horizon of 90 days Bowlin Travel Centers is expected to under-perform the MYR. But the pink sheet apears to be less risky and, when comparing its historical volatility, Bowlin Travel Centers is 2.41 times less risky than MYR. The pink sheet trades about -0.09 of its potential returns per unit of risk. The MYR Group is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  11,930  in MYR Group on October 22, 2024 and sell it today you would earn a total of  2,842  from holding MYR Group or generate 23.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Bowlin Travel Centers  vs.  MYR Group

Bowlin Travel Centers

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bowlin Travel Centers has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

MYR Group

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MYR Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, MYR reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bowlin Travel and MYR

The main advantage of trading using opposite Bowlin Travel and MYR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bowlin Travel position performs unexpectedly, MYR 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 MYR will offset losses from the drop in MYR's long position.

The idea behind Bowlin Travel Centers and MYR Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.