Correlation Between Cascades and Myers Industries

Can any of the company-specific risk be diversified away by investing in both Cascades and Myers Industries 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 Cascades and Myers Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cascades and Myers Industries, you can compare the effects of market volatilities on Cascades and Myers Industries 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 Cascades with a short position of Myers Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cascades and Myers Industries.

Diversification Opportunities for Cascades and Myers Industries

-0.31

Correlation Coefficient

Cascades  Myers Industries

Very good diversification

The 3 months correlation between Cascades and Myers is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Cascades and Myers Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Myers Industries and Cascades 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 Cascades are associated (or correlated) with Myers Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Myers Industries has no effect on the direction of Cascades i.e., Cascades and Myers Industries go up and down completely randomly.

Pair Corralation between Cascades and Myers Industries

Assuming the 90 days horizon Cascades is expected to generate 0.67 times more return on investment than Myers Industries. However, Cascades is 1.48 times less risky than Myers Industries. It trades about 0.03 of its potential returns per unit of risk. Myers Industries is currently generating about -0.1 per unit of risk. If you would invest  769.00  in Cascades on September 28, 2024 and sell it today you would earn a total of  20.00  from holding Cascades or generate 2.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Cascades  vs.  Myers Industries

Cascades

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cascades are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Cascades is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Myers Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Myers Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Cascades and Myers Industries

The main advantage of trading using opposite Cascades and Myers Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cascades position performs unexpectedly, Myers Industries 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 Myers Industries will offset losses from the drop in Myers Industries' long position.

The idea behind Cascades and Myers Industries 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.