Correlation Between Royalty Management and MYR

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

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

Diversification Opportunities for Royalty Management and MYR

-0.32

Correlation Coefficient

Royalty Management  MYR

Very good diversification

The 3 months correlation between Royalty and MYR is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Royalty Management Holding and MYR Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MYR Group and Royalty Management 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 Royalty Management Holding are associated (or correlated) with MYR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MYR Group has no effect on the direction of Royalty Management i.e., Royalty Management and MYR go up and down completely randomly.

Pair Corralation between Royalty Management and MYR

Assuming the 90 days horizon Royalty Management Holding is expected to generate 9.63 times more return on investment than MYR. However, Royalty Management is 9.63 times more volatile than MYR Group. It trades about 0.14 of its potential returns per unit of risk. MYR Group is currently generating about 0.15 per unit of risk. If you would invest  1.41  in Royalty Management Holding on October 23, 2024 and sell it today you would earn a total of  0.47  from holding Royalty Management Holding or generate 33.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	56.67%
Values	Daily Returns

Royalty Management Holding  vs.  MYR Group

Royalty Management

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Royalty Management Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly unfluctuating basic indicators, Royalty Management showed solid returns over the last few months and may actually be approaching a breakup point.

MYR Group

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MYR Group are ranked lower than 11 (%) 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.

Pair Trading with Royalty Management and MYR

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

The idea behind Royalty Management Holding and MYR 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.