Correlation Between Mistras and Transportation Portfolio

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

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

Diversification Opportunities for Mistras and Transportation Portfolio

-0.58

Correlation Coefficient

Mistras  Transportation Portfolio

Excellent diversification

The 3 months correlation between Mistras and Transportation is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Mistras Group and Transportation Portfolio Trans in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transportation Portfolio and Mistras 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 Mistras Group are associated (or correlated) with Transportation Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transportation Portfolio has no effect on the direction of Mistras i.e., Mistras and Transportation Portfolio go up and down completely randomly.

Pair Corralation between Mistras and Transportation Portfolio

Allowing for the 90-day total investment horizon Mistras Group is expected to under-perform the Transportation Portfolio. In addition to that, Mistras is 3.32 times more volatile than Transportation Portfolio Transportation. It trades about -0.06 of its total potential returns per unit of risk. Transportation Portfolio Transportation is currently generating about 0.15 per unit of volatility. If you would invest  10,809  in Transportation Portfolio Transportation on August 31, 2024 and sell it today you would earn a total of  1,212  from holding Transportation Portfolio Transportation or generate 11.21% return on investment over 90 days.

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

Mistras Group  vs.  Transportation Portfolio Trans

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.

Transportation Portfolio

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Transportation Portfolio Transportation are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Transportation Portfolio may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Mistras and Transportation Portfolio

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

The idea behind Mistras Group and Transportation Portfolio Transportation 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.