Correlation Between Matrix Service and Sterling Construction
Can any of the company-specific risk be diversified away by investing in both Matrix Service and Sterling Construction 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 Sterling Construction 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 Sterling Construction, you can compare the effects of market volatilities on Matrix Service and Sterling Construction 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 Sterling Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matrix Service and Sterling Construction.
Diversification Opportunities for Matrix Service and Sterling Construction
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Matrix and Sterling is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Matrix Service Co and Sterling Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Construction 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 Sterling Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sterling Construction has no effect on the direction of Matrix Service i.e., Matrix Service and Sterling Construction go up and down completely randomly.
Pair Corralation between Matrix Service and Sterling Construction
Given the investment horizon of 90 days Matrix Service Co is expected to generate 1.05 times more return on investment than Sterling Construction. However, Matrix Service is 1.05 times more volatile than Sterling Construction. It trades about 0.39 of its potential returns per unit of risk. Sterling Construction is currently generating about 0.09 per unit of risk. If you would invest 1,216 in Matrix Service Co on October 21, 2024 and sell it today you would earn a total of 272.00 from holding Matrix Service Co or generate 22.37% 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. Sterling Construction
Performance |
| Timeline |
| Matrix Service |
| Sterling Construction |
Matrix Service and Sterling Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Matrix Service and Sterling Construction
The main advantage of trading using opposite Matrix Service and Sterling Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matrix Service position performs unexpectedly, Sterling Construction 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 Sterling Construction will offset losses from the drop in Sterling Construction'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 |
| Sterling Construction vs. EMCOR Group | Sterling Construction vs. Comfort Systems USA | Sterling Construction vs. Primoris Services | Sterling Construction vs. Granite Construction Incorporated |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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