Correlation Between Mayville Engineering and Mueller Industries

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

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

Diversification Opportunities for Mayville Engineering and Mueller Industries

-0.53

Correlation Coefficient

Mayville Engineering  Mueller Industries

Excellent diversification

The 3 months correlation between Mayville and Mueller is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Mayville Engineering Co and Mueller Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mueller Industries and Mayville Engineering 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 Mayville Engineering Co are associated (or correlated) with Mueller Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mueller Industries has no effect on the direction of Mayville Engineering i.e., Mayville Engineering and Mueller Industries go up and down completely randomly.

Pair Corralation between Mayville Engineering and Mueller Industries

Considering the 90-day investment horizon Mayville Engineering Co is expected to under-perform the Mueller Industries. In addition to that, Mayville Engineering is 1.15 times more volatile than Mueller Industries. It trades about -0.12 of its total potential returns per unit of risk. Mueller Industries is currently generating about 0.08 per unit of volatility. If you would invest  7,410  in Mueller Industries on August 30, 2024 and sell it today you would earn a total of  724.00  from holding Mueller Industries or generate 9.77% return on investment over 90 days.

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

Mayville Engineering Co  vs.  Mueller Industries

Mayville Engineering

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mayville Engineering Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Mueller Industries

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Mueller Industries are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating essential indicators, Mueller Industries demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mayville Engineering and Mueller Industries

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

The idea behind Mayville Engineering Co and Mueller Industries 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.