Correlation Between Digital Locations and MYR

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

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

Diversification Opportunities for Digital Locations and MYR

-0.45

Correlation Coefficient

Digital Locations  MYR

Very good diversification

The 3 months correlation between Digital and MYR is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Digital Locations and MYR Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MYR Group and Digital Locations 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 Digital Locations are associated (or correlated) with MYR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MYR Group has no effect on the direction of Digital Locations i.e., Digital Locations and MYR go up and down completely randomly.

Pair Corralation between Digital Locations and MYR

Given the investment horizon of 90 days Digital Locations is expected to generate 4.06 times less return on investment than MYR. In addition to that, Digital Locations is 5.37 times more volatile than MYR Group. It trades about 0.01 of its total potential returns per unit of risk. MYR Group is currently generating about 0.3 per unit of volatility. If you would invest  9,453  in MYR Group on September 12, 2024 and sell it today you would earn a total of  6,437  from holding MYR Group or generate 68.09% return on investment over 90 days.

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

Digital Locations  vs.  MYR Group

Digital Locations

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Digital Locations are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, Digital Locations exhibited solid returns over the last few months and may actually be approaching a breakup point.

MYR Group

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in MYR Group are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, MYR reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Digital Locations and MYR

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

The idea behind Digital Locations and MYR Group 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.