Correlation Between Argan and MYR
Can any of the company-specific risk be diversified away by investing in both Argan 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 Argan and MYR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Argan Inc and MYR Group, you can compare the effects of market volatilities on Argan 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 Argan with a short position of MYR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Argan and MYR.
Diversification Opportunities for Argan and MYR
Almost no diversification
The 3 months correlation between Argan and MYR is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Argan Inc and MYR Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MYR Group and Argan 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 Argan Inc 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 Argan i.e., Argan and MYR go up and down completely randomly.
Pair Corralation between Argan and MYR
Considering the 90-day investment horizon Argan is expected to generate 1.32 times less return on investment than MYR. In addition to that, Argan is 1.04 times more volatile than MYR Group. It trades about 0.25 of its total potential returns per unit of risk. MYR Group is currently generating about 0.34 per unit of volatility. If you would invest 11,676 in MYR Group on August 27, 2024 and sell it today you would earn a total of 3,429 from holding MYR Group or generate 29.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Argan Inc vs. MYR Group
Performance |
| Timeline |
| Argan Inc |
| MYR Group |
Argan and MYR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Argan and MYR
The main advantage of trading using opposite Argan and MYR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Argan 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 Argan Inc 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.| MYR vs. Comfort Systems USA | MYR vs. Granite Construction Incorporated | MYR vs. Dycom Industries | MYR vs. MasTec Inc |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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