Correlation Between Matrix Service and Argan
Can any of the company-specific risk be diversified away by investing in both Matrix Service and Argan 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 Matrix Service and Argan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Matrix Service Co and Argan Inc, you can compare the effects of market volatilities on Matrix Service and Argan 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 Matrix Service with a short position of Argan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matrix Service and Argan.
Diversification Opportunities for Matrix Service and Argan
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Matrix and Argan is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Matrix Service Co and Argan Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Argan Inc and Matrix Service 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 Matrix Service Co are associated (or correlated) with Argan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Argan Inc has no effect on the direction of Matrix Service i.e., Matrix Service and Argan go up and down completely randomly.
Pair Corralation between Matrix Service and Argan
Given the investment horizon of 90 days Matrix Service Co is expected to generate 0.84 times more return on investment than Argan. However, Matrix Service Co is 1.19 times less risky than Argan. It trades about 0.23 of its potential returns per unit of risk. Argan Inc is currently generating about 0.17 per unit of risk. If you would invest 1,135 in Matrix Service Co on August 31, 2024 and sell it today you would earn a total of 195.00 from holding Matrix Service Co or generate 17.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Matrix Service Co vs. Argan Inc
Performance |
| Timeline |
| Matrix Service |
| Argan Inc |
Matrix Service and Argan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Matrix Service and Argan
The main advantage of trading using opposite Matrix Service and Argan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matrix Service position performs unexpectedly, Argan 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 Argan will offset losses from the drop in Argan's long position.| Matrix Service vs. EMCOR Group | Matrix Service vs. Comfort Systems USA | Matrix Service vs. Primoris Services | Matrix Service vs. Granite Construction Incorporated |
| Argan vs. Arcosa Inc | Argan vs. Construction Partners | Argan vs. Topbuild Corp | Argan vs. Comfort Systems USA |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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