Correlation Between Matrix Service and Exponent

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

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

Diversification Opportunities for Matrix Service and Exponent

0.8

Correlation Coefficient

Matrix Service  Exponent

Very poor diversification

The 3 months correlation between Matrix and Exponent is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Matrix Service Co and Exponent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exponent and Matrix Service 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 Service Co are associated (or correlated) with Exponent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exponent has no effect on the direction of Matrix Service i.e., Matrix Service and Exponent go up and down completely randomly.

Pair Corralation between Matrix Service and Exponent

Given the investment horizon of 90 days Matrix Service Co is expected to generate 2.6 times more return on investment than Exponent. However, Matrix Service is 2.6 times more volatile than Exponent. It trades about -0.04 of its potential returns per unit of risk. Exponent is currently generating about -0.2 per unit of risk. If you would invest  1,418  in Matrix Service Co on February 7, 2025 and sell it today you would lose (192.00) from holding Matrix Service Co or give up 13.54% of portfolio value over 90 days.

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

Matrix Service Co  vs.  Exponent

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 latest unsteady 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.

Exponent

Risk-Adjusted Performance

Very Weak

Over the last 90 days Exponent has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in June 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Matrix Service and Exponent

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

The idea behind Matrix Service Co and Exponent 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.