Correlation Between Matthews International and Mammoth Energy

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

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

Diversification Opportunities for Matthews International and Mammoth Energy

-0.56

Correlation Coefficient

Matthews International  Mammoth Energy

Excellent diversification

The 3 months correlation between Matthews and Mammoth is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Matthews International and Mammoth Energy Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mammoth Energy Services and Matthews International 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 Matthews International are associated (or correlated) with Mammoth Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mammoth Energy Services has no effect on the direction of Matthews International i.e., Matthews International and Mammoth Energy go up and down completely randomly.

Pair Corralation between Matthews International and Mammoth Energy

Given the investment horizon of 90 days Matthews International is expected to generate 0.95 times more return on investment than Mammoth Energy. However, Matthews International is 1.05 times less risky than Mammoth Energy. It trades about 0.1 of its potential returns per unit of risk. Mammoth Energy Services is currently generating about -0.01 per unit of risk. If you would invest  2,533  in Matthews International on August 30, 2024 and sell it today you would earn a total of  502.00  from holding Matthews International or generate 19.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Matthews International  vs.  Mammoth Energy Services

Matthews International

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Matthews International are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Matthews International showed solid returns over the last few months and may actually be approaching a breakup point.

Mammoth Energy Services

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mammoth Energy Services has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Mammoth Energy is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Matthews International and Mammoth Energy

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

The idea behind Matthews International and Mammoth Energy Services 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.