Correlation Between Nice and Matrix

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

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

Diversification Opportunities for Nice and Matrix

-0.57

Correlation Coefficient

Nice  Matrix

Excellent diversification

The 3 months correlation between Nice and Matrix is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Nice and Matrix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matrix and Nice 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 Nice are associated (or correlated) with Matrix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matrix has no effect on the direction of Nice i.e., Nice and Matrix go up and down completely randomly.

Pair Corralation between Nice and Matrix

Assuming the 90 days trading horizon Nice is expected to under-perform the Matrix. In addition to that, Nice is 2.19 times more volatile than Matrix. It trades about -0.09 of its total potential returns per unit of risk. Matrix is currently generating about 0.14 per unit of volatility. If you would invest  815,415  in Matrix on November 28, 2024 and sell it today you would earn a total of  79,685  from holding Matrix or generate 9.77% return on investment over 90 days.

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

Nice  vs.  Matrix

Nice

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nice has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Matrix

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Matrix are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Matrix may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Nice and Matrix

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

The idea behind Nice and Matrix 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 Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..