Correlation Between Dream Finders and MYR

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

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

Diversification Opportunities for Dream Finders and MYR

0.8

Correlation Coefficient

Dream Finders  MYR

Very poor diversification

The 3 months correlation between Dream and MYR is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Dream Finders HomesInc and MYR Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MYR Group and Dream Finders 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 Dream Finders HomesInc 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 Dream Finders i.e., Dream Finders and MYR go up and down completely randomly.

Pair Corralation between Dream Finders and MYR

Considering the 90-day investment horizon Dream Finders HomesInc is expected to generate 1.79 times more return on investment than MYR. However, Dream Finders is 1.79 times more volatile than MYR Group. It trades about 0.12 of its potential returns per unit of risk. MYR Group is currently generating about 0.15 per unit of risk. If you would invest  2,259  in Dream Finders HomesInc on February 1, 2024 and sell it today you would earn a total of  1,291  from holding Dream Finders HomesInc or generate 57.15% return on investment over 90 days.

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

Dream Finders HomesInc  vs.  MYR Group

Dream Finders HomesInc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dream Finders HomesInc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile technical and fundamental indicators, Dream Finders may actually be approaching a critical reversion point that can send shares even higher in June 2024.

MYR Group

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MYR Group are ranked lower than 7 (%) 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 Dream Finders and MYR

The main advantage of trading using opposite Dream Finders and MYR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dream Finders 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 Dream Finders HomesInc 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.