Correlation Between Matrix Service and Bouygues

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

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

Diversification Opportunities for Matrix Service and Bouygues

-0.33

Correlation Coefficient

Matrix Service  Bouygues

Very good diversification

The 3 months correlation between Matrix and Bouygues is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Matrix Service Co and Bouygues SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bouygues SA and Matrix Service 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 Matrix Service Co are associated (or correlated) with Bouygues. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bouygues SA has no effect on the direction of Matrix Service i.e., Matrix Service and Bouygues go up and down completely randomly.

Pair Corralation between Matrix Service and Bouygues

Given the investment horizon of 90 days Matrix Service is expected to generate 4.18 times less return on investment than Bouygues. In addition to that, Matrix Service is 1.51 times more volatile than Bouygues SA. It trades about 0.04 of its total potential returns per unit of risk. Bouygues SA is currently generating about 0.23 per unit of volatility. If you would invest  2,956  in Bouygues SA on December 30, 2024 and sell it today you would earn a total of  884.00  from holding Bouygues SA or generate 29.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	91.94%
Values	Daily Returns

Matrix Service Co  vs.  Bouygues SA

Matrix Service

Risk-Adjusted Performance

Weak

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 unsteady basic indicators, Matrix Service may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Bouygues SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bouygues SA are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Bouygues reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Matrix Service and Bouygues

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

The idea behind Matrix Service Co and Bouygues SA 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.