Correlation Between ENGlobal and MYR

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

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

Diversification Opportunities for ENGlobal and MYR

0.03

Correlation Coefficient

ENGlobal  MYR

Significant diversification

The 3 months correlation between ENGlobal and MYR is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding ENGlobal and MYR Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MYR Group and ENGlobal 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 ENGlobal 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 ENGlobal i.e., ENGlobal and MYR go up and down completely randomly.

Pair Corralation between ENGlobal and MYR

Considering the 90-day investment horizon ENGlobal is expected to under-perform the MYR. In addition to that, ENGlobal is 1.91 times more volatile than MYR Group. It trades about -0.02 of its total potential returns per unit of risk. MYR Group is currently generating about 0.3 per unit of volatility. If you would invest  9,419  in MYR Group on August 31, 2024 and sell it today you would earn a total of  6,371  from holding MYR Group or generate 67.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

ENGlobal  vs.  MYR Group

ENGlobal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ENGlobal has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

MYR Group

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in MYR Group are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, MYR reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ENGlobal and MYR

The main advantage of trading using opposite ENGlobal and MYR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ENGlobal 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 ENGlobal 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.