Correlation Between Matrix and Retailors

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

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

Diversification Opportunities for Matrix and Retailors

-0.53

Correlation Coefficient

Matrix  Retailors

Excellent diversification

The 3 months correlation between Matrix and Retailors is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Matrix and Retailors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Retailors and Matrix 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 Matrix are associated (or correlated) with Retailors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Retailors has no effect on the direction of Matrix i.e., Matrix and Retailors go up and down completely randomly.

Pair Corralation between Matrix and Retailors

Assuming the 90 days trading horizon Matrix is expected to generate 0.45 times more return on investment than Retailors. However, Matrix is 2.2 times less risky than Retailors. It trades about 0.37 of its potential returns per unit of risk. Retailors is currently generating about -0.05 per unit of risk. If you would invest  887,707  in Matrix on May 1, 2025 and sell it today you would earn a total of  360,293  from holding Matrix or generate 40.59% return on investment over 90 days.

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

Matrix  vs.  Retailors

Matrix

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Matrix are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Matrix sustained solid returns over the last few months and may actually be approaching a breakup point.

Retailors

Risk-Adjusted Performance

Very Weak

Over the last 90 days Retailors has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Matrix and Retailors

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

The idea behind Matrix and Retailors 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.