Correlation Between Packaging Corp and Myers Industries

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

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

Diversification Opportunities for Packaging Corp and Myers Industries

0.75

Correlation Coefficient

Packaging Corp  Myers Industries

Poor diversification

The 3 months correlation between Packaging and Myers is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Packaging Corp of and Myers Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Myers Industries and Packaging 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 Packaging Corp of are associated (or correlated) with Myers Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Myers Industries has no effect on the direction of Packaging Corp i.e., Packaging Corp and Myers Industries go up and down completely randomly.

Pair Corralation between Packaging Corp and Myers Industries

Considering the 90-day investment horizon Packaging Corp of is expected to under-perform the Myers Industries. In addition to that, Packaging Corp is 1.31 times more volatile than Myers Industries. It trades about -0.17 of its total potential returns per unit of risk. Myers Industries is currently generating about 0.11 per unit of volatility. If you would invest  2,222  in Myers Industries on February 5, 2024 and sell it today you would earn a total of  60.00  from holding Myers Industries or generate 2.7% return on investment over 90 days.

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

Packaging Corp of  vs.  Myers Industries

Packaging Corp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Packaging Corp of are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating forward-looking signals, Packaging Corp may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Myers Industries

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Myers Industries are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, Myers Industries exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Packaging Corp and Myers Industries

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

The idea behind Packaging Corp of and Myers 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.