Correlation Between Myers Industries and Crown Holdings

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

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

Diversification Opportunities for Myers Industries and Crown Holdings

-0.29

Correlation Coefficient

Myers Industries  Crown Holdings

Very good diversification

The 3 months correlation between Myers and Crown is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Myers Industries and Crown Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crown Holdings and Myers Industries 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 Myers Industries are associated (or correlated) with Crown Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crown Holdings has no effect on the direction of Myers Industries i.e., Myers Industries and Crown Holdings go up and down completely randomly.

Pair Corralation between Myers Industries and Crown Holdings

Considering the 90-day investment horizon Myers Industries is expected to under-perform the Crown Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Myers Industries is 1.31 times less risky than Crown Holdings. The stock trades about -0.19 of its potential returns per unit of risk. The Crown Holdings is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  7,743  in Crown Holdings on January 26, 2024 and sell it today you would earn a total of  140.00  from holding Crown Holdings or generate 1.81% return on investment over 90 days.

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

Myers Industries  vs.  Crown Holdings

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.

Crown Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Crown Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in May 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Myers Industries and Crown Holdings

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

The idea behind Myers Industries and Crown Holdings 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.