Correlation Between Mistras and Equifax

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

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

Diversification Opportunities for Mistras and Equifax

0.73

Correlation Coefficient

Mistras  Equifax

Poor diversification

The 3 months correlation between Mistras and Equifax is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Mistras Group and Equifax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equifax and Mistras 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 Mistras Group are associated (or correlated) with Equifax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equifax has no effect on the direction of Mistras i.e., Mistras and Equifax go up and down completely randomly.

Pair Corralation between Mistras and Equifax

Allowing for the 90-day total investment horizon Mistras Group is expected to generate 2.49 times more return on investment than Equifax. However, Mistras is 2.49 times more volatile than Equifax. It trades about -0.05 of its potential returns per unit of risk. Equifax is currently generating about -0.15 per unit of risk. If you would invest  1,077  in Mistras Group on September 13, 2024 and sell it today you would lose (160.00) from holding Mistras Group or give up 14.86% of portfolio value over 90 days.

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

Mistras Group  vs.  Equifax

Mistras Group

Risk-Adjusted Performance

0 of 100

Very Weak

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

Equifax

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Equifax has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Mistras and Equifax

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

The idea behind Mistras Group and Equifax 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.