Correlation Between Dycom Industries and Matrix Service

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

By analyzing existing cross correlation between Dycom Industries and Matrix Service Co, you can compare the effects of market volatilities on Dycom Industries and Matrix Service 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 Dycom Industries with a short position of Matrix Service. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dycom Industries and Matrix Service.

Diversification Opportunities for Dycom Industries and Matrix Service

0.82

Correlation Coefficient

Dycom Industries  Matrix Service

Very poor diversification

The 3 months correlation between Dycom and Matrix is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Dycom Industries and Matrix Service Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matrix Service and Dycom Industries 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 Dycom Industries are associated (or correlated) with Matrix Service. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matrix Service has no effect on the direction of Dycom Industries i.e., Dycom Industries and Matrix Service go up and down completely randomly.

Pair Corralation between Dycom Industries and Matrix Service

Allowing for the 90-day total investment horizon Dycom Industries is expected to generate 0.87 times more return on investment than Matrix Service. However, Dycom Industries is 1.15 times less risky than Matrix Service. It trades about -0.06 of its potential returns per unit of risk. Matrix Service Co is currently generating about -0.08 per unit of risk. If you would invest  18,042  in Dycom Industries on January 14, 2025 and sell it today you would lose (2,715) from holding Dycom Industries or give up 15.05% of portfolio value over 90 days.

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

Dycom Industries  vs.  Matrix Service Co

Dycom Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dycom Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in May 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Matrix Service

Risk-Adjusted Performance

Very Weak

Over the last 90 days Matrix Service Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in May 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Dycom Industries and Matrix Service

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

The idea behind Dycom Industries and Matrix Service Co 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.