Correlation Between IES Holdings and Matrix Service

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

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

Diversification Opportunities for IES Holdings and Matrix Service

0.62

Correlation Coefficient

IES Holdings  Matrix Service

Poor diversification

The 3 months correlation between IES and Matrix is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding IES Holdings and Matrix Service Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matrix Service and IES Holdings 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 IES Holdings 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 IES Holdings i.e., IES Holdings and Matrix Service go up and down completely randomly.

Pair Corralation between IES Holdings and Matrix Service

Given the investment horizon of 90 days IES Holdings is expected to under-perform the Matrix Service. In addition to that, IES Holdings is 1.75 times more volatile than Matrix Service Co. It trades about -0.03 of its total potential returns per unit of risk. Matrix Service Co is currently generating about 0.03 per unit of volatility. If you would invest  1,194  in Matrix Service Co on December 27, 2024 and sell it today you would earn a total of  36.00  from holding Matrix Service Co or generate 3.02% return on investment over 90 days.

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

IES Holdings  vs.  Matrix Service Co

IES Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days IES Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

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 IES Holdings and Matrix Service

The main advantage of trading using opposite IES Holdings and Matrix Service positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IES Holdings 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 IES Holdings 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.