Correlation Between MYR and Matrix Service

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

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

Diversification Opportunities for MYR and Matrix Service

0.88

Correlation Coefficient

MYR  Matrix Service

Very poor diversification

The 3 months correlation between MYR and Matrix is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding MYR Group and Matrix Service Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matrix Service and MYR 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 MYR Group are associated (or correlated) with Matrix Service. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matrix Service has no effect on the direction of MYR i.e., MYR and Matrix Service go up and down completely randomly.

Pair Corralation between MYR and Matrix Service

Given the investment horizon of 90 days MYR Group is expected to generate 0.9 times more return on investment than Matrix Service. However, MYR Group is 1.11 times less risky than Matrix Service. It trades about 0.3 of its potential returns per unit of risk. Matrix Service Co is currently generating about 0.19 per unit of risk. If you would invest  9,419  in MYR Group on August 31, 2024 and sell it today you would earn a total of  6,358  from holding MYR Group or generate 67.5% return on investment over 90 days.

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

MYR Group  vs.  Matrix Service Co

MYR Group

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in MYR Group are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, MYR reported solid returns over the last few months and may actually be approaching a breakup point.

Matrix Service

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Matrix Service Co are ranked lower than 14 (%) 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.

Pair Trading with MYR and Matrix Service

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

The idea behind MYR Group and Matrix Service Co 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.