Correlation Between Resideo Technologies and Mistras

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

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

Diversification Opportunities for Resideo Technologies and Mistras

-0.61

Correlation Coefficient

Resideo Technologies  Mistras

Excellent diversification

The 3 months correlation between Resideo and Mistras is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Resideo Technologies and Mistras Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mistras Group and Resideo Technologies 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 Resideo Technologies 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 Resideo Technologies i.e., Resideo Technologies and Mistras go up and down completely randomly.

Pair Corralation between Resideo Technologies and Mistras

Given the investment horizon of 90 days Resideo Technologies is expected to generate 0.5 times more return on investment than Mistras. However, Resideo Technologies is 2.01 times less risky than Mistras. It trades about 0.49 of its potential returns per unit of risk. Mistras Group is currently generating about -0.11 per unit of risk. If you would invest  2,020  in Resideo Technologies on August 31, 2024 and sell it today you would earn a total of  694.00  from holding Resideo Technologies or generate 34.36% return on investment over 90 days.

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

Resideo Technologies  vs.  Mistras Group

Resideo Technologies

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Resideo Technologies are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, Resideo Technologies demonstrated 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 Resideo Technologies and Mistras

The main advantage of trading using opposite Resideo Technologies and Mistras positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Resideo Technologies 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 Resideo Technologies 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.