Correlation Between Equifax and Mistras

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

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

Diversification Opportunities for Equifax and Mistras

0.72

Correlation Coefficient

Equifax  Mistras

Poor diversification

The 3 months correlation between Equifax and Mistras is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Equifax and Mistras Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mistras Group and Equifax 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 Equifax are associated (or correlated) with Mistras. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mistras Group has no effect on the direction of Equifax i.e., Equifax and Mistras go up and down completely randomly.

Pair Corralation between Equifax and Mistras

Considering the 90-day investment horizon Equifax is expected to under-perform the Mistras. But the stock apears to be less risky and, when comparing its historical volatility, Equifax is 2.47 times less risky than Mistras. The stock trades about -0.14 of its potential returns per unit of risk. The Mistras Group is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  1,123  in Mistras Group on September 1, 2024 and sell it today you would lose (192.00) from holding Mistras Group or give up 17.1% of portfolio value over 90 days.

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

Equifax  vs.  Mistras Group

Equifax

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Equifax has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Mistras Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mistras Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Equifax and Mistras

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

The idea behind Equifax and Mistras Group 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.