Correlation Between Matco Foods and Security Investment

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

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

Diversification Opportunities for Matco Foods and Security Investment

-0.17

Correlation Coefficient

Matco Foods  Security Investment

Good diversification

The 3 months correlation between Matco and Security is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Matco Foods and Security Investment Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Security Investment Bank and Matco Foods 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 Matco Foods are associated (or correlated) with Security Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Security Investment Bank has no effect on the direction of Matco Foods i.e., Matco Foods and Security Investment go up and down completely randomly.

Pair Corralation between Matco Foods and Security Investment

Assuming the 90 days trading horizon Matco Foods is expected to under-perform the Security Investment. But the stock apears to be less risky and, when comparing its historical volatility, Matco Foods is 1.67 times less risky than Security Investment. The stock trades about -0.07 of its potential returns per unit of risk. The Security Investment Bank is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  899.00  in Security Investment Bank on December 30, 2024 and sell it today you would earn a total of  116.00  from holding Security Investment Bank or generate 12.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Matco Foods  vs.  Security Investment Bank

Matco Foods

Risk-Adjusted Performance

Very Weak

Over the last 90 days Matco Foods has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Security Investment Bank

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Security Investment Bank are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Security Investment sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Matco Foods and Security Investment

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

The idea behind Matco Foods and Security Investment Bank 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.