Correlation Between Brady and Mistras

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

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

Diversification Opportunities for Brady and Mistras

0.18

Correlation Coefficient

Brady  Mistras

Average diversification

The 3 months correlation between Brady and Mistras is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Brady and Mistras Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mistras Group and Brady 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 Brady are associated (or correlated) with Mistras. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mistras Group has no effect on the direction of Brady i.e., Brady and Mistras go up and down completely randomly.

Pair Corralation between Brady and Mistras

Considering the 90-day investment horizon Brady is expected to under-perform the Mistras. In addition to that, Brady is 1.17 times more volatile than Mistras Group. It trades about 0.0 of its total potential returns per unit of risk. Mistras Group is currently generating about 0.07 per unit of volatility. If you would invest  928.00  in Mistras Group on November 27, 2024 and sell it today you would earn a total of  56.00  from holding Mistras Group or generate 6.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Brady  vs.  Mistras Group

Brady

Risk-Adjusted Performance

Very Weak

Over the last 90 days Brady has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Brady is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Mistras Group

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Mistras Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent technical and fundamental indicators, Mistras may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Brady and Mistras

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

The idea behind Brady and Mistras Group 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.