Correlation Between MYR and Independence Realty
Can any of the company-specific risk be diversified away by investing in both MYR and Independence Realty 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 Independence Realty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MYR Group and Independence Realty Trust, you can compare the effects of market volatilities on MYR and Independence Realty 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 Independence Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of MYR and Independence Realty.
Diversification Opportunities for MYR and Independence Realty
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between MYR and Independence is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding MYR Group and Independence Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Independence Realty Trust 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 Independence Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Independence Realty Trust has no effect on the direction of MYR i.e., MYR and Independence Realty go up and down completely randomly.
Pair Corralation between MYR and Independence Realty
Given the investment horizon of 90 days MYR Group is expected to generate 2.8 times more return on investment than Independence Realty. However, MYR is 2.8 times more volatile than Independence Realty Trust. It trades about 0.34 of its potential returns per unit of risk. Independence Realty Trust is currently generating about 0.32 per unit of risk. 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 Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MYR Group vs. Independence Realty Trust
Performance |
| Timeline |
| MYR Group |
| Independence Realty Trust |
MYR and Independence Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MYR and Independence Realty
The main advantage of trading using opposite MYR and Independence Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MYR position performs unexpectedly, Independence Realty 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 Independence Realty will offset losses from the drop in Independence Realty's long position.The idea behind MYR Group and Independence Realty Trust 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.| Independence Realty vs. Apartment Investment and | Independence Realty vs. Clipper Realty | Independence Realty vs. BRT Realty Trust | Independence Realty vs. UDR 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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