Correlation Between Topbuild Corp and MYR

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

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

Diversification Opportunities for Topbuild Corp and MYR

0.05

Correlation Coefficient

Topbuild Corp  MYR

Significant diversification

The 3 months correlation between Topbuild and MYR is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Topbuild Corp and MYR Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MYR Group and Topbuild 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 Topbuild 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 Topbuild Corp i.e., Topbuild Corp and MYR go up and down completely randomly.

Pair Corralation between Topbuild Corp and MYR

Considering the 90-day investment horizon Topbuild Corp is expected to generate 1.36 times less return on investment than MYR. But when comparing it to its historical volatility, Topbuild Corp is 1.16 times less risky than MYR. It trades about 0.03 of its potential returns per unit of risk. MYR Group is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  13,569  in MYR Group on March 25, 2025 and sell it today you would earn a total of  3,727  from holding MYR Group or generate 27.47% return on investment over 90 days.

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

Topbuild Corp  vs.  MYR Group

Topbuild Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Topbuild Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound essential indicators, Topbuild 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

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MYR Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, MYR reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Topbuild Corp and MYR

The main advantage of trading using opposite Topbuild Corp and MYR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Topbuild 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 Topbuild 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.