Correlation Between Sound Shore and Matrix Advisors

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

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

Diversification Opportunities for Sound Shore and Matrix Advisors

0.48

Correlation Coefficient

Sound Shore  Matrix Advisors

Very weak diversification

The 3 months correlation between Sound and Matrix is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Sound Shore Fund and Matrix Advisors Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matrix Advisors Value and Sound Shore 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 Sound Shore Fund are associated (or correlated) with Matrix Advisors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matrix Advisors Value has no effect on the direction of Sound Shore i.e., Sound Shore and Matrix Advisors go up and down completely randomly.

Pair Corralation between Sound Shore and Matrix Advisors

Assuming the 90 days horizon Sound Shore Fund is expected to under-perform the Matrix Advisors. In addition to that, Sound Shore is 1.78 times more volatile than Matrix Advisors Value. It trades about -0.03 of its total potential returns per unit of risk. Matrix Advisors Value is currently generating about 0.07 per unit of volatility. If you would invest  8,899  in Matrix Advisors Value on December 4, 2024 and sell it today you would earn a total of  1,365  from holding Matrix Advisors Value or generate 15.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	97.96%
Values	Daily Returns

Sound Shore Fund  vs.  Matrix Advisors Value

Sound Shore Fund

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sound Shore Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's technical and fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Matrix Advisors Value

Risk-Adjusted Performance

Very Weak

Over the last 90 days Matrix Advisors Value has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Matrix Advisors is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sound Shore and Matrix Advisors

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

The idea behind Sound Shore Fund and Matrix Advisors Value 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.