Correlation Between MYR and Park Ohio

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

By analyzing existing cross correlation between MYR Group and Park Ohio Holdings, you can compare the effects of market volatilities on MYR and Park Ohio 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 Park Ohio. Check out your portfolio center. Please also check ongoing floating volatility patterns of MYR and Park Ohio.

Diversification Opportunities for MYR and Park Ohio

0.86

Correlation Coefficient

MYR  Park Ohio

Very poor diversification

The 3 months correlation between MYR and Park is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding MYR Group and Park Ohio Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Park Ohio Holdings 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 Park Ohio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Park Ohio Holdings has no effect on the direction of MYR i.e., MYR and Park Ohio go up and down completely randomly.

Pair Corralation between MYR and Park Ohio

Given the investment horizon of 90 days MYR Group is expected to generate 1.13 times more return on investment than Park Ohio. However, MYR is 1.13 times more volatile than Park Ohio Holdings. It trades about 0.33 of its potential returns per unit of risk. Park Ohio Holdings is currently generating about 0.1 per unit of risk. If you would invest  9,052  in MYR Group on September 5, 2024 and sell it today you would earn a total of  6,964  from holding MYR Group or generate 76.93% return on investment over 90 days.

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

MYR Group  vs.  Park Ohio Holdings

MYR Group

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in MYR Group are ranked lower than 25 (%) 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.

Park Ohio Holdings

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Park Ohio Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, Park Ohio demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MYR and Park Ohio

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

The idea behind MYR Group and Park Ohio Holdings 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.