Correlation Between Mastech Holdings and Barrett Business

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

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

Diversification Opportunities for Mastech Holdings and Barrett Business

0.92

Correlation Coefficient

Mastech Holdings  Barrett Business

Almost no diversification

The 3 months correlation between Mastech and Barrett is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Mastech Holdings and Barrett Business Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barrett Business Services and Mastech 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 Mastech Holdings are associated (or correlated) with Barrett Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barrett Business Services has no effect on the direction of Mastech Holdings i.e., Mastech Holdings and Barrett Business go up and down completely randomly.

Pair Corralation between Mastech Holdings and Barrett Business

Considering the 90-day investment horizon Mastech Holdings is expected to generate 3.54 times more return on investment than Barrett Business. However, Mastech Holdings is 3.54 times more volatile than Barrett Business Services. It trades about 0.32 of its potential returns per unit of risk. Barrett Business Services is currently generating about 0.41 per unit of risk. If you would invest  1,015  in Mastech Holdings on September 4, 2024 and sell it today you would earn a total of  546.00  from holding Mastech Holdings or generate 53.79% return on investment over 90 days.

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

Mastech Holdings  vs.  Barrett Business Services

Mastech Holdings

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mastech Holdings are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent technical indicators, Mastech Holdings demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Barrett Business Services

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Barrett Business Services are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Barrett Business demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mastech Holdings and Barrett Business

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

The idea behind Mastech Holdings and Barrett Business Services 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.