Correlation Between Haynes International and Mayville Engineering

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Can any of the company-specific risk be diversified away by investing in both Haynes International 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 Haynes International and Mayville Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Haynes International and Mayville Engineering Co, you can compare the effects of market volatilities on Haynes International 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 Haynes International with a short position of Mayville Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Haynes International and Mayville Engineering.

Diversification Opportunities for Haynes International and Mayville Engineering

-0.24
  Correlation Coefficient

Very good diversification

The 3 months correlation between Haynes and Mayville is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Haynes International and Mayville Engineering Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mayville Engineering and Haynes International 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 Haynes International 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 Haynes International i.e., Haynes International and Mayville Engineering go up and down completely randomly.

Pair Corralation between Haynes International and Mayville Engineering

Given the investment horizon of 90 days Haynes International is expected to generate 19.15 times less return on investment than Mayville Engineering. But when comparing it to its historical volatility, Haynes International is 9.35 times less risky than Mayville Engineering. It trades about 0.16 of its potential returns per unit of risk. Mayville Engineering Co is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  1,194  in Mayville Engineering Co on December 29, 2023 and sell it today you would earn a total of  239.00  from holding Mayville Engineering Co or generate 20.02% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Haynes International  vs.  Mayville Engineering Co

 Performance 
       Timeline  
Haynes International 

Risk-Adjusted Performance

5 of 100

 
Low
 
High
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Haynes International are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Haynes International is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.
Mayville Engineering 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Mayville Engineering Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Mayville Engineering is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Haynes International and Mayville Engineering Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Haynes International and Mayville Engineering

The main advantage of trading using opposite Haynes International and Mayville Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Haynes International 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.
The idea behind Haynes International and Mayville Engineering Co 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.

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