Correlation Between Myers Industries and Gibraltar Industries

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

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

Diversification Opportunities for Myers Industries and Gibraltar Industries

0.4

Correlation Coefficient

Myers Industries  Gibraltar Industries

Very weak diversification

The 3 months correlation between Myers and Gibraltar is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Myers Industries and Gibraltar Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gibraltar Industries 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 Gibraltar Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gibraltar Industries has no effect on the direction of Myers Industries i.e., Myers Industries and Gibraltar Industries go up and down completely randomly.

Pair Corralation between Myers Industries and Gibraltar Industries

Considering the 90-day investment horizon Myers Industries is expected to under-perform the Gibraltar Industries. In addition to that, Myers Industries is 1.03 times more volatile than Gibraltar Industries. It trades about -0.01 of its total potential returns per unit of risk. Gibraltar Industries is currently generating about 0.06 per unit of volatility. If you would invest  4,010  in Gibraltar Industries on March 12, 2024 and sell it today you would earn a total of  2,994  from holding Gibraltar Industries or generate 74.66% return on investment over 90 days.

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

Myers Industries  vs.  Gibraltar Industries

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.

Gibraltar Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gibraltar Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Myers Industries and Gibraltar Industries

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

The idea behind Myers Industries and Gibraltar Industries 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.