Correlation Between Huron Consulting and Mistras

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

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

Diversification Opportunities for Huron Consulting and Mistras

-0.82

Correlation Coefficient

Huron Consulting  Mistras

Pay attention - limited upside

The 3 months correlation between Huron and Mistras is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Huron Consulting Group and Mistras Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mistras Group and Huron Consulting 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 Huron Consulting Group 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 Huron Consulting i.e., Huron Consulting and Mistras go up and down completely randomly.

Pair Corralation between Huron Consulting and Mistras

Given the investment horizon of 90 days Huron Consulting is expected to generate 1.61 times less return on investment than Mistras. But when comparing it to its historical volatility, Huron Consulting Group is 1.14 times less risky than Mistras. It trades about 0.15 of its potential returns per unit of risk. Mistras Group is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  845.00  in Mistras Group on September 1, 2024 and sell it today you would earn a total of  86.00  from holding Mistras Group or generate 10.18% return on investment over 90 days.

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

Huron Consulting Group  vs.  Mistras Group

Huron Consulting

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Huron Consulting Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Huron Consulting displayed solid returns over the last few months and may actually be approaching a breakup point.

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 Huron Consulting and Mistras

The main advantage of trading using opposite Huron Consulting and Mistras positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Huron Consulting 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 Huron Consulting Group 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.

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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.