Correlation Between Construction Partners and MYR

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

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

Diversification Opportunities for Construction Partners and MYR

0.95

Correlation Coefficient

Construction Partners  MYR

Almost no diversification

The 3 months correlation between Construction and MYR is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Construction Partners and MYR Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MYR Group and Construction Partners 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 Construction Partners 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 Construction Partners i.e., Construction Partners and MYR go up and down completely randomly.

Pair Corralation between Construction Partners and MYR

Given the investment horizon of 90 days Construction Partners is expected to generate 1.12 times more return on investment than MYR. However, Construction Partners is 1.12 times more volatile than MYR Group. It trades about 0.27 of its potential returns per unit of risk. MYR Group is currently generating about 0.3 per unit of risk. If you would invest  6,065  in Construction Partners on August 31, 2024 and sell it today you would earn a total of  4,049  from holding Construction Partners or generate 66.76% return on investment over 90 days.

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

Construction Partners  vs.  MYR Group

Construction Partners

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Construction Partners are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Construction Partners exhibited solid returns over the last few months and may actually be approaching a breakup point.

MYR Group

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in MYR Group are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, MYR reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Construction Partners and MYR

The main advantage of trading using opposite Construction Partners and MYR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Construction Partners 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 Construction Partners 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.