Correlation Between Matrix Service and Fluor

Can any of the company-specific risk be diversified away by investing in both Matrix Service and Fluor 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 Fluor 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 Fluor, you can compare the effects of market volatilities on Matrix Service and Fluor 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 Fluor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matrix Service and Fluor.

Diversification Opportunities for Matrix Service and Fluor

-0.28

Correlation Coefficient

Matrix Service  Fluor

Very good diversification

The 3 months correlation between Matrix and Fluor is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Matrix Service Co and Fluor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fluor 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 Fluor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fluor has no effect on the direction of Matrix Service i.e., Matrix Service and Fluor go up and down completely randomly.

Pair Corralation between Matrix Service and Fluor

Given the investment horizon of 90 days Matrix Service Co is expected to generate 0.61 times more return on investment than Fluor. However, Matrix Service Co is 1.63 times less risky than Fluor. It trades about 0.0 of its potential returns per unit of risk. Fluor is currently generating about -0.24 per unit of risk. If you would invest  1,526  in Matrix Service Co on November 19, 2024 and sell it today you would lose (6.00) from holding Matrix Service Co or give up 0.39% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Matrix Service Co  vs.  Fluor

Matrix Service

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Matrix Service Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Matrix Service showed solid returns over the last few months and may actually be approaching a breakup point.

Fluor

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Matrix Service and Fluor

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

The idea behind Matrix Service Co and Fluor 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.