Correlation Between CompoSecure and Mayville Engineering
Can any of the company-specific risk be diversified away by investing in both CompoSecure and Mayville Engineering 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 CompoSecure and Mayville Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CompoSecure and Mayville Engineering Co, you can compare the effects of market volatilities on CompoSecure and Mayville Engineering 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 CompoSecure with a short position of Mayville Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of CompoSecure and Mayville Engineering.
Diversification Opportunities for CompoSecure and Mayville Engineering
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between CompoSecure and Mayville is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding CompoSecure and Mayville Engineering Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mayville Engineering and CompoSecure 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 CompoSecure are associated (or correlated) with Mayville Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mayville Engineering has no effect on the direction of CompoSecure i.e., CompoSecure and Mayville Engineering go up and down completely randomly.
Pair Corralation between CompoSecure and Mayville Engineering
Given the investment horizon of 90 days CompoSecure is expected to generate 1.02 times more return on investment than Mayville Engineering. However, CompoSecure is 1.02 times more volatile than Mayville Engineering Co. It trades about 0.09 of its potential returns per unit of risk. Mayville Engineering Co is currently generating about 0.04 per unit of risk. If you would invest 647.00 in CompoSecure on August 27, 2024 and sell it today you would earn a total of 957.00 from holding CompoSecure or generate 147.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CompoSecure vs. Mayville Engineering Co
Performance |
| Timeline |
| CompoSecure |
| Mayville Engineering |
CompoSecure and Mayville Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CompoSecure and Mayville Engineering
The main advantage of trading using opposite CompoSecure and Mayville Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CompoSecure position performs unexpectedly, Mayville Engineering 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 Mayville Engineering will offset losses from the drop in Mayville Engineering's long position.| CompoSecure vs. Northwest Pipe | CompoSecure vs. Insteel Industries | CompoSecure vs. Carpenter Technology | CompoSecure vs. ESAB Corp |
| Mayville Engineering vs. Haynes International | Mayville Engineering vs. Insteel Industries | Mayville Engineering vs. Gulf Island Fabrication | Mayville Engineering vs. ESAB Corp |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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