Correlation Between Arcadis NV and Matrix Service

Can any of the company-specific risk be diversified away by investing in both Arcadis NV and Matrix Service 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 Arcadis NV and Matrix Service into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Arcadis NV and Matrix Service

0.09

Correlation Coefficient

Arcadis NV  Matrix Service

Significant diversification

The 3 months correlation between Arcadis and Matrix is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Arcadis NV and Matrix Service Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matrix Service and Arcadis NV 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 Arcadis NV are associated (or correlated) with Matrix Service. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matrix Service has no effect on the direction of Arcadis NV i.e., Arcadis NV and Matrix Service go up and down completely randomly.

Pair Corralation between Arcadis NV and Matrix Service

Assuming the 90 days horizon Arcadis NV is expected to generate 0.36 times more return on investment than Matrix Service. However, Arcadis NV is 2.82 times less risky than Matrix Service. It trades about 0.0 of its potential returns per unit of risk. Matrix Service Co is currently generating about -0.01 per unit of risk. If you would invest  5,245  in Arcadis NV on December 26, 2024 and sell it today you would lose (7.00) from holding Arcadis NV or give up 0.13% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.65%
Values	Daily Returns

Arcadis NV  vs.  Matrix Service Co

Arcadis NV

Risk-Adjusted Performance

Very Weak

Over the last 90 days Arcadis NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Matrix Service

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Matrix Service Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Matrix Service is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Arcadis NV and Matrix Service

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

The idea behind Arcadis NV and Matrix Service Co 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.