Correlation Between Mistras and Beacon Roofing
Can any of the company-specific risk be diversified away by investing in both Mistras and Beacon Roofing 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 Mistras and Beacon Roofing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mistras Group and Beacon Roofing Supply, you can compare the effects of market volatilities on Mistras and Beacon Roofing 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 Mistras with a short position of Beacon Roofing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mistras and Beacon Roofing.
Diversification Opportunities for Mistras and Beacon Roofing
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Mistras and Beacon is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Mistras Group and Beacon Roofing Supply in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beacon Roofing Supply and Mistras 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 Mistras Group are associated (or correlated) with Beacon Roofing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beacon Roofing Supply has no effect on the direction of Mistras i.e., Mistras and Beacon Roofing go up and down completely randomly.
Pair Corralation between Mistras and Beacon Roofing
Allowing for the 90-day total investment horizon Mistras Group is expected to under-perform the Beacon Roofing. In addition to that, Mistras is 1.96 times more volatile than Beacon Roofing Supply. It trades about -0.12 of its total potential returns per unit of risk. Beacon Roofing Supply is currently generating about 0.28 per unit of volatility. If you would invest 9,485 in Beacon Roofing Supply on August 27, 2024 and sell it today you would earn a total of 1,733 from holding Beacon Roofing Supply or generate 18.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mistras Group vs. Beacon Roofing Supply
Performance |
| Timeline |
| Mistras Group |
| Beacon Roofing Supply |
Mistras and Beacon Roofing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mistras and Beacon Roofing
The main advantage of trading using opposite Mistras and Beacon Roofing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mistras position performs unexpectedly, Beacon Roofing 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 Beacon Roofing will offset losses from the drop in Beacon Roofing's long position.| Mistras vs. Franklin Covey | Mistras vs. TransUnion | Mistras vs. ICF International | Mistras vs. Huron Consulting Group |
| Beacon Roofing vs. Global Industrial Co | Beacon Roofing vs. WESCO International | Beacon Roofing vs. MSC Industrial Direct |
Check out your portfolio center.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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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