Correlation Between MYR and Marfrig Global

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

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

Diversification Opportunities for MYR and Marfrig Global

0.75

Correlation Coefficient

MYR  Marfrig Global

Poor diversification

The 3 months correlation between MYR and Marfrig is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding MYR Group and Marfrig Global Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marfrig Global Foods and MYR 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 MYR Group are associated (or correlated) with Marfrig Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marfrig Global Foods has no effect on the direction of MYR i.e., MYR and Marfrig Global go up and down completely randomly.

Pair Corralation between MYR and Marfrig Global

Given the investment horizon of 90 days MYR Group is expected to generate 0.81 times more return on investment than Marfrig Global. However, MYR Group is 1.23 times less risky than Marfrig Global. It trades about 0.11 of its potential returns per unit of risk. Marfrig Global Foods is currently generating about 0.05 per unit of risk. If you would invest  12,368  in MYR Group on October 20, 2024 and sell it today you would earn a total of  2,404  from holding MYR Group or generate 19.44% return on investment over 90 days.

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

MYR Group  vs.  Marfrig Global Foods

MYR Group

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MYR Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, MYR reported solid returns over the last few months and may actually be approaching a breakup point.

Marfrig Global Foods

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Marfrig Global Foods are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Marfrig Global may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with MYR and Marfrig Global

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

The idea behind MYR Group and Marfrig Global Foods 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.