Correlation Between Northwest Pipe and Mayville Engineering
Can any of the company-specific risk be diversified away by investing in both Northwest Pipe 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 Northwest Pipe and Mayville Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northwest Pipe and Mayville Engineering Co, you can compare the effects of market volatilities on Northwest Pipe 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 Northwest Pipe with a short position of Mayville Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northwest Pipe and Mayville Engineering.
Diversification Opportunities for Northwest Pipe and Mayville Engineering
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Northwest and Mayville is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Northwest Pipe and Mayville Engineering Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mayville Engineering and Northwest Pipe 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 Northwest Pipe 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 Northwest Pipe i.e., Northwest Pipe and Mayville Engineering go up and down completely randomly.
Pair Corralation between Northwest Pipe and Mayville Engineering
Given the investment horizon of 90 days Northwest Pipe is expected to generate 1.01 times less return on investment than Mayville Engineering. But when comparing it to its historical volatility, Northwest Pipe is 1.63 times less risky than Mayville Engineering. It trades about 0.05 of its potential returns per unit of risk. Mayville Engineering Co is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,323 in Mayville Engineering Co on August 26, 2024 and sell it today you would earn a total of 376.00 from holding Mayville Engineering Co or generate 28.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northwest Pipe vs. Mayville Engineering Co
Performance |
| Timeline |
| Northwest Pipe |
| Mayville Engineering |
Northwest Pipe and Mayville Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northwest Pipe and Mayville Engineering
The main advantage of trading using opposite Northwest Pipe and Mayville Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northwest Pipe 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.| Northwest Pipe vs. Insteel Industries | Northwest Pipe vs. Carpenter Technology | Northwest Pipe vs. ESAB Corp | Northwest Pipe vs. Gulf Island Fabrication |
| 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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