Correlation Between Universal Technical and MYR

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

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

Diversification Opportunities for Universal Technical and MYR

0.83

Correlation Coefficient

Universal Technical  MYR

Very poor diversification

The 3 months correlation between Universal and MYR is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Universal Technical Institute and MYR Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MYR Group and Universal Technical 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 Universal Technical Institute 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 Universal Technical i.e., Universal Technical and MYR go up and down completely randomly.

Pair Corralation between Universal Technical and MYR

Considering the 90-day investment horizon Universal Technical is expected to generate 1.89 times less return on investment than MYR. But when comparing it to its historical volatility, Universal Technical Institute is 1.43 times less risky than MYR. It trades about 0.07 of its potential returns per unit of risk. MYR Group is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  15,230  in MYR Group on October 25, 2024 and sell it today you would earn a total of  503.00  from holding MYR Group or generate 3.3% return on investment over 90 days.

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

Universal Technical Institute  vs.  MYR Group

Universal Technical

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Universal Technical Institute are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Universal Technical demonstrated solid returns over the last few months and may actually be approaching a breakup point.

MYR Group

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MYR Group are ranked lower than 13 (%) 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 Universal Technical and MYR

The main advantage of trading using opposite Universal Technical and MYR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Technical 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 Universal Technical Institute 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.