Correlation Between Matrix Service and Stantec

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

Diversification Opportunities for Matrix Service and Stantec

-0.21

Correlation Coefficient

Matrix Service  Stantec

Very good diversification

The 3 months correlation between Matrix and Stantec is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Matrix Service Co and Stantec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stantec 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 Stantec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stantec has no effect on the direction of Matrix Service i.e., Matrix Service and Stantec go up and down completely randomly.

Pair Corralation between Matrix Service and Stantec

Given the investment horizon of 90 days Matrix Service Co is expected to under-perform the Stantec. In addition to that, Matrix Service is 1.44 times more volatile than Stantec. It trades about -0.03 of its total potential returns per unit of risk. Stantec is currently generating about 0.0 per unit of volatility. If you would invest  8,675  in Stantec on December 1, 2024 and sell it today you would lose (147.00) from holding Stantec or give up 1.69% of portfolio value over 90 days.

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

Matrix Service Co  vs.  Stantec

Matrix Service

Risk-Adjusted Performance

Very Weak

Over the last 90 days Matrix Service Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Matrix Service is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Stantec

Risk-Adjusted Performance

Very Weak

Over the last 90 days Stantec has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Stantec is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Matrix Service and Stantec

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

The idea behind Matrix Service Co and Stantec 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..