Correlation Between Mayville Engineering and Ampco Pittsburgh

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

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

Diversification Opportunities for Mayville Engineering and Ampco Pittsburgh

-0.46

Correlation Coefficient

Mayville Engineering  Ampco Pittsburgh

Very good diversification

The 3 months correlation between Mayville and Ampco is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Mayville Engineering Co and Ampco Pittsburgh in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ampco Pittsburgh and Mayville Engineering 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 Mayville Engineering Co are associated (or correlated) with Ampco Pittsburgh. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ampco Pittsburgh has no effect on the direction of Mayville Engineering i.e., Mayville Engineering and Ampco Pittsburgh go up and down completely randomly.

Pair Corralation between Mayville Engineering and Ampco Pittsburgh

Considering the 90-day investment horizon Mayville Engineering Co is expected to generate 0.56 times more return on investment than Ampco Pittsburgh. However, Mayville Engineering Co is 1.79 times less risky than Ampco Pittsburgh. It trades about 0.15 of its potential returns per unit of risk. Ampco Pittsburgh is currently generating about -0.08 per unit of risk. If you would invest  1,191  in Mayville Engineering Co on January 25, 2024 and sell it today you would earn a total of  170.00  from holding Mayville Engineering Co or generate 14.27% return on investment over 90 days.

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

Mayville Engineering Co  vs.  Ampco Pittsburgh

Mayville Engineering

Risk-Adjusted Performance

0 of 100

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 recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Ampco Pittsburgh

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ampco Pittsburgh has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in May 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Mayville Engineering and Ampco Pittsburgh

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

The idea behind Mayville Engineering Co and Ampco Pittsburgh 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.