Correlation Between Mistras and Transportation Fund

Can any of the company-specific risk be diversified away by investing in both Mistras and Transportation Fund 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 Fund 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 Fund Investor, you can compare the effects of market volatilities on Mistras and Transportation Fund 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 Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mistras and Transportation Fund.

Diversification Opportunities for Mistras and Transportation Fund

-0.69

Correlation Coefficient

Mistras  Transportation Fund

Excellent diversification

The 3 months correlation between Mistras and Transportation is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Mistras Group and Transportation Fund Investor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transportation Fund 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 Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transportation Fund has no effect on the direction of Mistras i.e., Mistras and Transportation Fund go up and down completely randomly.

Pair Corralation between Mistras and Transportation Fund

Allowing for the 90-day total investment horizon Mistras Group is expected to under-perform the Transportation Fund. In addition to that, Mistras is 3.06 times more volatile than Transportation Fund Investor. It trades about -0.05 of its total potential returns per unit of risk. Transportation Fund Investor is currently generating about 0.18 per unit of volatility. If you would invest  5,667  in Transportation Fund Investor on September 13, 2024 and sell it today you would earn a total of  838.00  from holding Transportation Fund Investor or generate 14.79% return on investment over 90 days.

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

Mistras Group  vs.  Transportation Fund Investor

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 latest inconsistent performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Transportation Fund

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Transportation Fund Investor are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Transportation Fund showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mistras and Transportation Fund

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

The idea behind Mistras Group and Transportation Fund Investor 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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.