Correlation Between Myers Industries and Quanex Building

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

By analyzing existing cross correlation between Myers Industries and Quanex Building Products, you can compare the effects of market volatilities on Myers Industries and Quanex Building 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 Myers Industries with a short position of Quanex Building. Check out your portfolio center. Please also check ongoing floating volatility patterns of Myers Industries and Quanex Building.

Diversification Opportunities for Myers Industries and Quanex Building

0.69

Correlation Coefficient

Myers Industries  Quanex Building

Poor diversification

The 3 months correlation between Myers and Quanex is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Myers Industries and Quanex Building Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quanex Building Products and Myers Industries 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 Myers Industries are associated (or correlated) with Quanex Building. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quanex Building Products has no effect on the direction of Myers Industries i.e., Myers Industries and Quanex Building go up and down completely randomly.

Pair Corralation between Myers Industries and Quanex Building

Considering the 90-day investment horizon Myers Industries is expected to under-perform the Quanex Building. In addition to that, Myers Industries is 3.32 times more volatile than Quanex Building Products. It trades about -0.34 of its total potential returns per unit of risk. Quanex Building Products is currently generating about -0.38 per unit of volatility. If you would invest  3,511  in Quanex Building Products on March 7, 2024 and sell it today you would lose (397.00) from holding Quanex Building Products or give up 11.31% of portfolio value over 90 days.

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

Myers Industries  vs.  Quanex Building Products

Myers Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Myers Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in July 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Quanex Building Products

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Quanex Building Products has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Myers Industries and Quanex Building

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

The idea behind Myers Industries and Quanex Building Products 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.