Correlation Between MYR and AGCO
Can any of the company-specific risk be diversified away by investing in both MYR and AGCO 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 MYR and AGCO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MYR Group and AGCO Corporation, you can compare the effects of market volatilities on MYR and AGCO 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 MYR with a short position of AGCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of MYR and AGCO.
Diversification Opportunities for MYR and AGCO
Modest diversification
The 3 months correlation between MYR and AGCO is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding MYR Group and AGCO Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGCO and MYR 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 MYR Group are associated (or correlated) with AGCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AGCO has no effect on the direction of MYR i.e., MYR and AGCO go up and down completely randomly.
Pair Corralation between MYR and AGCO
Given the investment horizon of 90 days MYR Group is expected to generate 1.39 times more return on investment than AGCO. However, MYR is 1.39 times more volatile than AGCO Corporation. It trades about 0.37 of its potential returns per unit of risk. AGCO Corporation is currently generating about -0.02 per unit of risk. If you would invest 11,676 in MYR Group on August 29, 2024 and sell it today you would earn a total of 4,201 from holding MYR Group or generate 35.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MYR Group vs. AGCO Corp.
Performance |
| Timeline |
| MYR Group |
| AGCO |
MYR and AGCO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MYR and AGCO
The main advantage of trading using opposite MYR and AGCO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MYR position performs unexpectedly, AGCO 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 AGCO will offset losses from the drop in AGCO's long position.| 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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