Correlation Between Mayville Engineering and ESAB Corp

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

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

Diversification Opportunities for Mayville Engineering and ESAB Corp

0.16

Correlation Coefficient

Mayville Engineering  ESAB Corp

Average diversification

The 3 months correlation between Mayville and ESAB is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Mayville Engineering Co and ESAB Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ESAB Corp and Mayville Engineering 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 Mayville Engineering Co are associated (or correlated) with ESAB Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ESAB Corp has no effect on the direction of Mayville Engineering i.e., Mayville Engineering and ESAB Corp go up and down completely randomly.

Pair Corralation between Mayville Engineering and ESAB Corp

Considering the 90-day investment horizon Mayville Engineering Co is expected to generate 1.81 times more return on investment than ESAB Corp. However, Mayville Engineering is 1.81 times more volatile than ESAB Corp. It trades about 0.18 of its potential returns per unit of risk. ESAB Corp is currently generating about 0.1 per unit of risk. If you would invest  1,285  in Mayville Engineering Co on May 7, 2025 and sell it today you would earn a total of  387.00  from holding Mayville Engineering Co or generate 30.12% return on investment over 90 days.

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

Mayville Engineering Co  vs.  ESAB Corp

Mayville Engineering

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mayville Engineering Co are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Mayville Engineering exhibited solid returns over the last few months and may actually be approaching a breakup point.

ESAB Corp

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in ESAB Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, ESAB Corp may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Mayville Engineering and ESAB Corp

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

The idea behind Mayville Engineering Co and ESAB Corp 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.