Correlation Between Matrix Service and Great Lakes

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

Diversification Opportunities for Matrix Service and Great Lakes

0.29

Correlation Coefficient

Matrix Service  Great Lakes

Modest diversification

The 3 months correlation between Matrix and Great is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Matrix Service Co and Great Lakes Dredge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great Lakes Dredge 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 Great Lakes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great Lakes Dredge has no effect on the direction of Matrix Service i.e., Matrix Service and Great Lakes go up and down completely randomly.

Pair Corralation between Matrix Service and Great Lakes

Given the investment horizon of 90 days Matrix Service Co is expected to generate 0.87 times more return on investment than Great Lakes. However, Matrix Service Co is 1.16 times less risky than Great Lakes. It trades about 0.04 of its potential returns per unit of risk. Great Lakes Dredge is currently generating about -0.09 per unit of risk. If you would invest  1,203  in Matrix Service Co on December 28, 2024 and sell it today you would earn a total of  50.00  from holding Matrix Service Co or generate 4.16% return on investment over 90 days.

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

Matrix Service Co  vs.  Great Lakes Dredge

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.

Great Lakes Dredge

Risk-Adjusted Performance

Very Weak

Over the last 90 days Great Lakes Dredge has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Matrix Service and Great Lakes

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

The idea behind Matrix Service Co and Great Lakes Dredge 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 CEOs Directory module to screen CEOs from public companies around the world.