Correlation Between MYR and Transurban

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

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

Diversification Opportunities for MYR and Transurban

0.3

Correlation Coefficient

MYR  Transurban

Weak diversification

The 3 months correlation between MYR and Transurban is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding MYR Group and Transurban Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transurban Group 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 Transurban. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transurban Group has no effect on the direction of MYR i.e., MYR and Transurban go up and down completely randomly.

Pair Corralation between MYR and Transurban

Given the investment horizon of 90 days MYR Group is expected to under-perform the Transurban. But the stock apears to be less risky and, when comparing its historical volatility, MYR Group is 1.31 times less risky than Transurban. The stock trades about -0.12 of its potential returns per unit of risk. The Transurban Group is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  863.00  in Transurban Group on December 2, 2024 and sell it today you would lose (43.00) from holding Transurban Group or give up 4.98% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	81.97%
Values	Daily Returns

MYR Group  vs.  Transurban Group

MYR Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days MYR Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Transurban Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Transurban Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Transurban is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with MYR and Transurban

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

The idea behind MYR Group and Transurban Group 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.