Correlation Between Mueller Industries and Haynes International

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

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

Diversification Opportunities for Mueller Industries and Haynes International

0.73

Correlation Coefficient

Mueller Industries  Haynes International

Poor diversification

The 3 months correlation between Mueller and Haynes is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Mueller Industries and Haynes International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Haynes International and Mueller Industries 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 Mueller Industries are associated (or correlated) with Haynes International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Haynes International has no effect on the direction of Mueller Industries i.e., Mueller Industries and Haynes International go up and down completely randomly.

Pair Corralation between Mueller Industries and Haynes International

Considering the 90-day investment horizon Mueller Industries is expected to generate 14.38 times more return on investment than Haynes International. However, Mueller Industries is 14.38 times more volatile than Haynes International. It trades about 0.08 of its potential returns per unit of risk. Haynes International is currently generating about 0.27 per unit of risk. 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 Together
Strength	Significant
Accuracy	90.7%
Values	Daily Returns

Mueller Industries  vs.  Haynes International

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.

Haynes International

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Haynes International are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Haynes International is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Mueller Industries and Haynes International

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

The idea behind Mueller Industries and Haynes International 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.