Correlation Between Meritage and Everus Construction

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Can any of the company-specific risk be diversified away by investing in both Meritage and Everus Construction 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 Meritage and Everus Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Meritage and Everus Construction Group, you can compare the effects of market volatilities on Meritage and Everus Construction 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 Meritage with a short position of Everus Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meritage and Everus Construction.

Diversification Opportunities for Meritage and Everus Construction

MeritageEverusDiversified AwayMeritageEverusDiversified Away100%
0.11
  Correlation Coefficient

Average diversification

The 3 months correlation between Meritage and Everus is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Meritage and Everus Construction Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Everus Construction and Meritage 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 Meritage are associated (or correlated) with Everus Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Everus Construction has no effect on the direction of Meritage i.e., Meritage and Everus Construction go up and down completely randomly.

Pair Corralation between Meritage and Everus Construction

Considering the 90-day investment horizon Meritage is expected to generate 0.35 times more return on investment than Everus Construction. However, Meritage is 2.85 times less risky than Everus Construction. It trades about -0.23 of its potential returns per unit of risk. Everus Construction Group is currently generating about -0.47 per unit of risk. If you would invest  8,098  in Meritage on November 25, 2024 and sell it today you would lose (720.00) from holding Meritage or give up 8.89% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Meritage  vs.  Everus Construction Group

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -100102030
JavaScript chart by amCharts 3.21.15MTH ECG
       Timeline  
Meritage 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Meritage has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in March 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb7580859095
Everus Construction 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Everus Construction Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb45505560657075

Meritage and Everus Construction Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-3.53-2.64-1.76-0.870.01290.771.552.323.09 0.030.040.050.060.070.080.09
JavaScript chart by amCharts 3.21.15MTH ECG
       Returns  

Pair Trading with Meritage and Everus Construction

The main advantage of trading using opposite Meritage and Everus Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meritage position performs unexpectedly, Everus Construction 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 Everus Construction will offset losses from the drop in Everus Construction's long position.
The idea behind Meritage and Everus Construction 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.
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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.

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