Correlation Between Great Lakes and Matrix Service

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

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

Diversification Opportunities for Great Lakes and Matrix Service

0.29

Correlation Coefficient

Great Lakes  Matrix Service

Modest diversification

The 3 months correlation between Great and Matrix is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Great Lakes Dredge and Matrix Service Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matrix Service and Great Lakes 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 Great Lakes Dredge 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 Great Lakes i.e., Great Lakes and Matrix Service go up and down completely randomly.

Pair Corralation between Great Lakes and Matrix Service

Given the investment horizon of 90 days Great Lakes Dredge is expected to under-perform the Matrix Service. In addition to that, Great Lakes is 1.16 times more volatile than Matrix Service Co. It trades about -0.09 of its total potential returns per unit of risk. Matrix Service Co is currently generating about 0.04 per unit of volatility. If you would invest  1,203  in Matrix Service Co on December 28, 2024 and sell it today you would earn a total of  50.00  from holding Matrix Service Co or generate 4.16% return on investment over 90 days.

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

Great Lakes Dredge  vs.  Matrix Service Co

Great Lakes Dredge

Risk-Adjusted Performance

Very Weak

Over the last 90 days Great Lakes Dredge has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Matrix Service

Risk-Adjusted Performance

Weak

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 unsteady basic indicators, Matrix Service may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Great Lakes and Matrix Service

The main advantage of trading using opposite Great Lakes and Matrix Service positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great Lakes 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 Great Lakes Dredge 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.