Correlation Between Mayville Engineering and Haynes International

Can any of the company-specific risk be diversified away by investing in both Mayville Engineering and Haynes International 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 Haynes International 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 Haynes International, you can compare the effects of market volatilities on Mayville Engineering and Haynes International 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 Haynes International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mayville Engineering and Haynes International.

Diversification Opportunities for Mayville Engineering and Haynes International

0.05

Correlation Coefficient

Mayville Engineering  Haynes International

Significant diversification

The 3 months correlation between Mayville and Haynes is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Mayville Engineering Co and Haynes International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Haynes International 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 Haynes International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Haynes International has no effect on the direction of Mayville Engineering i.e., Mayville Engineering and Haynes International go up and down completely randomly.

Pair Corralation between Mayville Engineering and Haynes International

Considering the 90-day investment horizon Mayville Engineering Co is expected to under-perform the Haynes International. In addition to that, Mayville Engineering is 6.98 times more volatile than Haynes International. It trades about -0.05 of its total potential returns per unit of risk. Haynes International is currently generating about 0.09 per unit of volatility. If you would invest  6,009  in Haynes International on January 25, 2024 and sell it today you would earn a total of  31.00  from holding Haynes International or generate 0.52% return on investment over 90 days.

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

Mayville Engineering Co  vs.  Haynes International

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.

Haynes International

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Haynes International are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Haynes International may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Mayville Engineering and Haynes International

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

The idea behind Mayville Engineering Co and Haynes International 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.