Correlation Between Tetra Tech and MYR

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

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

Diversification Opportunities for Tetra Tech and MYR

0.88

Correlation Coefficient

Tetra Tech  MYR

Very poor diversification

The 3 months correlation between Tetra and MYR is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Tetra Tech and MYR Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MYR Group and Tetra Tech 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 Tetra Tech 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 Tetra Tech i.e., Tetra Tech and MYR go up and down completely randomly.

Pair Corralation between Tetra Tech and MYR

Given the investment horizon of 90 days Tetra Tech is expected to under-perform the MYR. But the stock apears to be less risky and, when comparing its historical volatility, Tetra Tech is 1.72 times less risky than MYR. The stock trades about -0.25 of its potential returns per unit of risk. The MYR Group is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  15,007  in MYR Group on December 27, 2024 and sell it today you would lose (2,910) from holding MYR Group or give up 19.39% of portfolio value over 90 days.

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

Tetra Tech  vs.  MYR Group

Tetra Tech

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tetra Tech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite sluggish performance in the last few months, the Stock's technical and fundamental 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.

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.

Pair Trading with Tetra Tech and MYR

The main advantage of trading using opposite Tetra Tech and MYR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tetra Tech 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 Tetra Tech 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.