Correlation Between Ryder System and Mammoth Energy

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

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

Diversification Opportunities for Ryder System and Mammoth Energy

0.7

Correlation Coefficient

Ryder System  Mammoth Energy

Poor diversification

The 3 months correlation between Ryder and Mammoth is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Ryder System and Mammoth Energy Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mammoth Energy Services and Ryder System 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 Ryder System are associated (or correlated) with Mammoth Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mammoth Energy Services has no effect on the direction of Ryder System i.e., Ryder System and Mammoth Energy go up and down completely randomly.

Pair Corralation between Ryder System and Mammoth Energy

Taking into account the 90-day investment horizon Ryder System is expected to generate 0.47 times more return on investment than Mammoth Energy. However, Ryder System is 2.11 times less risky than Mammoth Energy. It trades about -0.07 of its potential returns per unit of risk. Mammoth Energy Services is currently generating about -0.08 per unit of risk. If you would invest  15,855  in Ryder System on December 27, 2024 and sell it today you would lose (1,395) from holding Ryder System or give up 8.8% of portfolio value over 90 days.

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

Ryder System  vs.  Mammoth Energy Services

Ryder System

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ryder System has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Mammoth Energy Services

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mammoth Energy Services has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Ryder System and Mammoth Energy

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

The idea behind Ryder System and Mammoth Energy Services 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.