MUELLER WATER PRODUCTS, INC.

9.79 -0.23 (-2.39%) Buy

Are you evaluating investing in MWA? Wait as it showed weakness

13 min read

MWA delivered massive losses today. On a longer term basis, investors in MUELLER WATER PRODUCTS, INC. made -0.02% per day. Friday's performance of -2.39% was a significant underperformance compared to it's daily average.

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MWA showed a strong down trend over the last 3 months. During this period MWA lost -16.25% and saw a maximum drawdown of -18.42%. It has been unusually choppy during this period. Long term investors are better off avoiding investing in MWA till volatility reduces and a clear trend emerges.

Trend

MWA has been underperforming the SP500 index in recent time, after having outperformed till 8 Dec, 2016. Over the last 2 years 11 months and 10 days, MWA underperformed the SP500 index on 47% days. Which indicates that on days MWA underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.

During the last three months MWA was mostly loss making and delivered on average -0.26% per day. It's best return during this period (of +5.26%) was on Tuesday, 6 Nov, 2018. While it's worst loss in the same period (of -5.14%) was on Tuesday, 4 Dec, 2018. There was initially a bullish trend during this period which started on 1 Nov, 2018 and went on till 7 Nov, 2018. The bullish trend returned +13.35% to investors. This was followed by a bearish trend that started on 8 Nov, 2018 and ended on 14 Nov, 2018. This bearish trend lost -8.45% of investor capital.

MWA had 3 profitable and 9 loss making months over the last year. During the last year, MWA underperformed SP500 index on monthly return basis. MWA significantly outperformed SP500 index in May 2018, when it returned +21.65% compared to +4.75% returned by SP500 index during it's best month in the last one year - Jan 2018. MWA had a longer winning streak of losing months than SP500 index. It went down in 4 straight months (from Jan 2018 to Apr 2018) during which period it delivered -17.55%.

"You will never be a greater risk-taker in the markets if you approach life with a completely different attitude.

MWA is becoming less volatile overall. In comparison, the SP500 index is seeing a rise in volatility. During the last three months, there was a significant surge in MWA's volatility from 17 Sep, 2018 to 6 Nov, 2018. While there was a significant surge in the SP500 index's volatility from 25 Sep, 2018 to 29 Oct, 2018.

Advanced/professional short-term investors should note that MWA has negative skewness in it's return distribution. This indicates that investors may need to stay invested through long periods of drawdown before expecting a recovery.

SP500 index has more chance of extreme outcomes than MWA. Therefore, SP500 must receive a lower allocation than MWA in your portfolio. SP500 index usually has shorter drawdown period than MWA.

On a general note (since you are interested in MWA), two instruments that have delivered similar performance as MWA are LAD and IPAR. They are suitable as good alternative investment candidates that can diversify your portfolio.

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