Correlation Between Matrix Service and Willdan

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

Diversification Opportunities for Matrix Service and Willdan

-0.01

Correlation Coefficient

Matrix Service  Willdan

Good diversification

The 3 months correlation between Matrix and Willdan is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Matrix Service Co and Willdan Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Willdan Group 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 Willdan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Willdan Group has no effect on the direction of Matrix Service i.e., Matrix Service and Willdan go up and down completely randomly.

Pair Corralation between Matrix Service and Willdan

Given the investment horizon of 90 days Matrix Service is expected to generate 1.48 times less return on investment than Willdan. In addition to that, Matrix Service is 2.12 times more volatile than Willdan Group. It trades about 0.26 of its total potential returns per unit of risk. Willdan Group is currently generating about 0.81 per unit of volatility. If you would invest  3,690  in Willdan Group on February 20, 2025 and sell it today you would earn a total of  1,365  from holding Willdan Group or generate 36.99% return on investment over 90 days.

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

Matrix Service Co  vs.  Willdan Group

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 fairly strong basic indicators, Matrix Service is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Willdan Group

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Willdan Group are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile fundamental indicators, Willdan displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Matrix Service and Willdan

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

The idea behind Matrix Service Co and Willdan 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.