Correlation Between Mistras and Team

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

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

Diversification Opportunities for Mistras and Team

0.44

Correlation Coefficient

Mistras  Team

Very weak diversification

The 3 months correlation between Mistras and Team is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Mistras Group and Team Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Team Inc 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 Team. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Team Inc has no effect on the direction of Mistras i.e., Mistras and Team go up and down completely randomly.

Pair Corralation between Mistras and Team

Allowing for the 90-day total investment horizon Mistras is expected to generate 1.5 times less return on investment than Team. But when comparing it to its historical volatility, Mistras Group is 2.46 times less risky than Team. It trades about 0.13 of its potential returns per unit of risk. Team Inc is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,402  in Team Inc on December 28, 2024 and sell it today you would earn a total of  277.00  from holding Team Inc or generate 19.76% return on investment over 90 days.

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

Mistras Group  vs.  Team Inc

Mistras Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mistras Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent technical and fundamental indicators, Mistras reported solid returns over the last few months and may actually be approaching a breakup point.

Team Inc

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Team Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Team demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mistras and Team

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

The idea behind Mistras Group and Team Inc 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.