Correlation Between Myers Industries and Ardagh Metal

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

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

Diversification Opportunities for Myers Industries and Ardagh Metal

0.5

Correlation Coefficient

Myers Industries  Ardagh Metal

Very weak diversification

The 3 months correlation between Myers and Ardagh is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Myers Industries and Ardagh Metal Packaging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ardagh Metal Packaging and Myers 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 Myers Industries are associated (or correlated) with Ardagh Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ardagh Metal Packaging has no effect on the direction of Myers Industries i.e., Myers Industries and Ardagh Metal go up and down completely randomly.

Pair Corralation between Myers Industries and Ardagh Metal

Considering the 90-day investment horizon Myers Industries is expected to generate 1.28 times more return on investment than Ardagh Metal. However, Myers Industries is 1.28 times more volatile than Ardagh Metal Packaging. It trades about -0.05 of its potential returns per unit of risk. Ardagh Metal Packaging is currently generating about -0.12 per unit of risk. If you would invest  1,226  in Myers Industries on October 3, 2024 and sell it today you would lose (122.00) from holding Myers Industries or give up 9.95% of portfolio value over 90 days.

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

Myers Industries  vs.  Ardagh Metal Packaging

Myers Industries

Risk-Adjusted Performance

0 of 100

Very Weak

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

Ardagh Metal Packaging

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ardagh Metal Packaging has generated negative risk-adjusted returns adding no value to investors with long positions. Even with conflicting performance in the last few months, the Stock's fundamental drivers remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Myers Industries and Ardagh Metal

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

The idea behind Myers Industries and Ardagh Metal Packaging 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.