Correlation Between Myers Industries and CCL Industries

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

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

Diversification Opportunities for Myers Industries and CCL Industries

-0.08

Correlation Coefficient

Myers Industries  CCL Industries

Good diversification

The 3 months correlation between Myers and CCL is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Myers Industries and CCL Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CCL Industries 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 CCL Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CCL Industries has no effect on the direction of Myers Industries i.e., Myers Industries and CCL Industries go up and down completely randomly.

Pair Corralation between Myers Industries and CCL Industries

Considering the 90-day investment horizon Myers Industries is expected to generate 1.78 times more return on investment than CCL Industries. However, Myers Industries is 1.78 times more volatile than CCL Industries. It trades about -0.04 of its potential returns per unit of risk. CCL Industries is currently generating about -0.1 per unit of risk. If you would invest  1,190  in Myers Industries on December 2, 2024 and sell it today you would lose (94.00) from holding Myers Industries or give up 7.9% of portfolio value over 90 days.

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

Myers Industries  vs.  CCL Industries

Myers Industries

Risk-Adjusted Performance

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.

CCL Industries

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Myers Industries and CCL Industries

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

The idea behind Myers Industries and CCL 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.