Correlation Between Proto Labs and Mayville Engineering
Can any of the company-specific risk be diversified away by investing in both Proto Labs 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 Proto Labs and Mayville Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Proto Labs and Mayville Engineering Co, you can compare the effects of market volatilities on Proto Labs 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 Proto Labs with a short position of Mayville Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Proto Labs and Mayville Engineering.
Diversification Opportunities for Proto Labs and Mayville Engineering
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Proto and Mayville is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Proto Labs and Mayville Engineering Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mayville Engineering and Proto Labs 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 Proto Labs 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 Proto Labs i.e., Proto Labs and Mayville Engineering go up and down completely randomly.
Pair Corralation between Proto Labs and Mayville Engineering
Given the investment horizon of 90 days Proto Labs is expected to generate 1.2 times more return on investment than Mayville Engineering. However, Proto Labs is 1.2 times more volatile than Mayville Engineering Co. It trades about 0.29 of its potential returns per unit of risk. Mayville Engineering Co is currently generating about -0.03 per unit of risk. If you would invest 3,854 in Proto Labs on November 18, 2024 and sell it today you would earn a total of 564.00 from holding Proto Labs or generate 14.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Proto Labs vs. Mayville Engineering Co
Performance |
| Timeline |
| Proto Labs |
| Mayville Engineering |
Proto Labs and Mayville Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Proto Labs and Mayville Engineering
The main advantage of trading using opposite Proto Labs and Mayville Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Proto Labs 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.| Proto Labs vs. Northwest Pipe | Proto Labs vs. Tredegar | Proto Labs vs. Insteel Industries | Proto Labs vs. Ryerson Holding Corp |
| Mayville Engineering vs. Insteel Industries | Mayville Engineering vs. Gulf Island Fabrication | Mayville Engineering vs. ESAB Corp | Mayville Engineering vs. Northwest Pipe |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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