Correlation Between Greif Bros and Myers Industries

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

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

Diversification Opportunities for Greif Bros and Myers Industries

0.72

Correlation Coefficient

Greif Bros  Myers Industries

Poor diversification

The 3 months correlation between Greif and Myers is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Greif Bros and Myers Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Myers Industries and Greif Bros 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 Greif Bros are associated (or correlated) with Myers Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Myers Industries has no effect on the direction of Greif Bros i.e., Greif Bros and Myers Industries go up and down completely randomly.

Pair Corralation between Greif Bros and Myers Industries

Considering the 90-day investment horizon Greif Bros is expected to under-perform the Myers Industries. In addition to that, Greif Bros is 1.1 times more volatile than Myers Industries. It trades about -0.25 of its total potential returns per unit of risk. Myers Industries is currently generating about -0.19 per unit of volatility. If you would invest  2,312  in Myers Industries on January 26, 2024 and sell it today you would lose (111.00) from holding Myers Industries or give up 4.8% of portfolio value over 90 days.

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

Greif Bros  vs.  Myers Industries

Greif Bros

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Greif Bros has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Greif Bros is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Myers Industries

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Myers Industries are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, Myers Industries exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Greif Bros and Myers Industries

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

The idea behind Greif Bros and Myers Industries 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.