Correlation Between Mayville Engineering and CompoSecure
Can any of the company-specific risk be diversified away by investing in both Mayville Engineering and CompoSecure 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 Mayville Engineering and CompoSecure into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mayville Engineering Co and CompoSecure, you can compare the effects of market volatilities on Mayville Engineering and CompoSecure 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 Mayville Engineering with a short position of CompoSecure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mayville Engineering and CompoSecure.
Diversification Opportunities for Mayville Engineering and CompoSecure
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mayville and CompoSecure is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Mayville Engineering Co and CompoSecure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CompoSecure and Mayville Engineering 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 Mayville Engineering Co are associated (or correlated) with CompoSecure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CompoSecure has no effect on the direction of Mayville Engineering i.e., Mayville Engineering and CompoSecure go up and down completely randomly.
Pair Corralation between Mayville Engineering and CompoSecure
Considering the 90-day investment horizon Mayville Engineering Co is expected to generate 0.21 times more return on investment than CompoSecure. However, Mayville Engineering Co is 4.8 times less risky than CompoSecure. It trades about -0.03 of its potential returns per unit of risk. CompoSecure is currently generating about -0.02 per unit of risk. If you would invest 1,433 in Mayville Engineering Co on January 28, 2024 and sell it today you would lose (27.00) from holding Mayville Engineering Co or give up 1.88% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 90.48% |
Values | Daily Returns |
Mayville Engineering Co vs. CompoSecure
Performance |
Timeline |
Mayville Engineering |
CompoSecure |
Mayville Engineering and CompoSecure Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Mayville Engineering and CompoSecure
The main advantage of trading using opposite Mayville Engineering and CompoSecure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mayville Engineering position performs unexpectedly, CompoSecure 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 CompoSecure will offset losses from the drop in CompoSecure's long position.Mayville Engineering vs. Haynes International | Mayville Engineering vs. Insteel Industries | Mayville Engineering vs. Gulf Island Fabrication | Mayville Engineering vs. ESAB Corp |
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Check out your portfolio center.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.
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