Correlation Between ENGlobal and Matrix Service

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

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

Diversification Opportunities for ENGlobal and Matrix Service

-0.07

Correlation Coefficient

ENGlobal  Matrix Service

Good diversification

The 3 months correlation between ENGlobal and Matrix is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding ENGlobal and Matrix Service Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matrix Service and ENGlobal 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 ENGlobal 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 ENGlobal i.e., ENGlobal and Matrix Service go up and down completely randomly.

Pair Corralation between ENGlobal and Matrix Service

Considering the 90-day investment horizon ENGlobal is expected to under-perform the Matrix Service. In addition to that, ENGlobal is 1.71 times more volatile than Matrix Service Co. It trades about -0.02 of its total potential returns per unit of risk. Matrix Service Co is currently generating about 0.19 per unit of volatility. If you would invest  942.00  in Matrix Service Co on August 31, 2024 and sell it today you would earn a total of  388.00  from holding Matrix Service Co or generate 41.19% return on investment over 90 days.

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

ENGlobal  vs.  Matrix Service Co

ENGlobal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ENGlobal has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Matrix Service

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Matrix Service Co are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Matrix Service showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ENGlobal and Matrix Service

The main advantage of trading using opposite ENGlobal and Matrix Service positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ENGlobal 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 ENGlobal 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.

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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.