Correlation Between Myers Industries and Pactiv Evergreen

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

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

Diversification Opportunities for Myers Industries and Pactiv Evergreen

0.39

Correlation Coefficient

Myers Industries  Pactiv Evergreen

Weak diversification

The 3 months correlation between Myers and Pactiv is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Myers Industries and Pactiv Evergreen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pactiv Evergreen 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 Pactiv Evergreen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pactiv Evergreen has no effect on the direction of Myers Industries i.e., Myers Industries and Pactiv Evergreen go up and down completely randomly.

Pair Corralation between Myers Industries and Pactiv Evergreen

Considering the 90-day investment horizon Myers Industries is expected to generate 18.59 times more return on investment than Pactiv Evergreen. However, Myers Industries is 18.59 times more volatile than Pactiv Evergreen. It trades about 0.05 of its potential returns per unit of risk. Pactiv Evergreen is currently generating about 0.22 per unit of risk. If you would invest  1,096  in Myers Industries on December 27, 2024 and sell it today you would earn a total of  89.00  from holding Myers Industries or generate 8.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Myers Industries  vs.  Pactiv Evergreen

Myers Industries

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Myers Industries are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Myers Industries exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pactiv Evergreen

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pactiv Evergreen are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Pactiv Evergreen is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Myers Industries and Pactiv Evergreen

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

The idea behind Myers Industries and Pactiv Evergreen 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.