Correlation Between MYR and WELLS

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

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

Diversification Opportunities for MYR and WELLS

0.04

Correlation Coefficient

MYR  WELLS

Significant diversification

The 3 months correlation between MYR and WELLS is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding MYR Group and WELLS FARGO BK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WELLS FARGO BK 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 WELLS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WELLS FARGO BK has no effect on the direction of MYR i.e., MYR and WELLS go up and down completely randomly.

Pair Corralation between MYR and WELLS

Given the investment horizon of 90 days MYR is expected to generate 32.65 times less return on investment than WELLS. But when comparing it to its historical volatility, MYR Group is 30.01 times less risky than WELLS. It trades about 0.06 of its potential returns per unit of risk. WELLS FARGO BK is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  10,562  in WELLS FARGO BK on September 13, 2024 and sell it today you would lose (612.00) from holding WELLS FARGO BK or give up 5.79% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	34.82%
Values	Daily Returns

MYR Group  vs.  WELLS FARGO BK

MYR Group

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in MYR Group are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite nearly sluggish basic indicators, MYR reported solid returns over the last few months and may actually be approaching a breakup point.

WELLS FARGO BK

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WELLS FARGO BK has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for WELLS FARGO BK investors.

Pair Trading with MYR and WELLS

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

The idea behind MYR Group and WELLS FARGO BK 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.