Correlation Between Canadian Pacific and MYR
Can any of the company-specific risk be diversified away by investing in both Canadian Pacific 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 Canadian Pacific and MYR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canadian Pacific Railway and MYR Group, you can compare the effects of market volatilities on Canadian Pacific 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 Canadian Pacific with a short position of MYR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Pacific and MYR.
Diversification Opportunities for Canadian Pacific and MYR
-0.87 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Canadian and MYR is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Pacific Railway and MYR Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MYR Group and Canadian Pacific 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 Canadian Pacific Railway 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 Canadian Pacific i.e., Canadian Pacific and MYR go up and down completely randomly.
Pair Corralation between Canadian Pacific and MYR
Allowing for the 90-day total investment horizon Canadian Pacific Railway is expected to under-perform the MYR. But the stock apears to be less risky and, when comparing its historical volatility, Canadian Pacific Railway is 2.83 times less risky than MYR. The stock trades about -0.1 of its potential returns per unit of risk. The MYR Group is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 11,646 in MYR Group on August 30, 2024 and sell it today you would earn a total of 4,131 from holding MYR Group or generate 35.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canadian Pacific Railway vs. MYR Group
Performance |
| Timeline |
| Canadian Pacific Railway |
| MYR Group |
Canadian Pacific and MYR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Pacific and MYR
The main advantage of trading using opposite Canadian Pacific and MYR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Pacific 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.| Canadian Pacific vs. Union Pacific | Canadian Pacific vs. CSX Corporation | Canadian Pacific vs. Westinghouse Air Brake | Canadian Pacific vs. Canadian National Railway |
| 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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