Correlation Between Innovate Corp and MYR

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

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

Diversification Opportunities for Innovate Corp and MYR

-0.58

Correlation Coefficient

Innovate Corp  MYR

Excellent diversification

The 3 months correlation between Innovate and MYR is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Innovate Corp and MYR Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MYR Group and Innovate Corp 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 Innovate Corp 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 Innovate Corp i.e., Innovate Corp and MYR go up and down completely randomly.

Pair Corralation between Innovate Corp and MYR

Given the investment horizon of 90 days Innovate Corp is expected to generate 2.6 times more return on investment than MYR. However, Innovate Corp is 2.6 times more volatile than MYR Group. It trades about 0.19 of its potential returns per unit of risk. MYR Group is currently generating about -0.33 per unit of risk. If you would invest  67.00  in Innovate Corp on February 4, 2024 and sell it today you would earn a total of  17.68  from holding Innovate Corp or generate 26.39% return on investment over 90 days.

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

Innovate Corp  vs.  MYR Group

Innovate Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Innovate Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Innovate Corp is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

MYR Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MYR Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, MYR is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Innovate Corp and MYR

The main advantage of trading using opposite Innovate Corp and MYR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innovate Corp 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 Innovate Corp 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 Transaction History module to view history of all your transactions and understand their impact on performance.