Correlation Between Auction Technology and Marks
Can any of the company-specific risk be diversified away by investing in both Auction Technology and Marks 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 Auction Technology and Marks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Auction Technology Group and Marks and Spencer, you can compare the effects of market volatilities on Auction Technology and Marks 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 Auction Technology with a short position of Marks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Auction Technology and Marks.
Diversification Opportunities for Auction Technology and Marks
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Auction and Marks is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Auction Technology Group and Marks and Spencer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marks and Spencer and Auction Technology 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 Auction Technology Group are associated (or correlated) with Marks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marks and Spencer has no effect on the direction of Auction Technology i.e., Auction Technology and Marks go up and down completely randomly.
Pair Corralation between Auction Technology and Marks
Assuming the 90 days trading horizon Auction Technology Group is expected to generate 0.5 times more return on investment than Marks. However, Auction Technology Group is 1.99 times less risky than Marks. It trades about -0.32 of its potential returns per unit of risk. Marks and Spencer is currently generating about -0.31 per unit of risk. If you would invest 58,400 in Auction Technology Group on October 13, 2024 and sell it today you would lose (4,600) from holding Auction Technology Group or give up 7.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Auction Technology Group vs. Marks and Spencer
Performance |
| Timeline |
| Auction Technology |
| Marks and Spencer |
Auction Technology and Marks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Auction Technology and Marks
The main advantage of trading using opposite Auction Technology and Marks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Auction Technology position performs unexpectedly, Marks 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 Marks will offset losses from the drop in Marks' long position.| Auction Technology vs. Hochschild Mining plc | Auction Technology vs. Adriatic Metals | Auction Technology vs. McEwen Mining | Auction Technology vs. European Metals Holdings |
| Marks vs. LPKF Laser Electronics | Marks vs. Verizon Communications | Marks vs. Oxford Technology 2 | Marks vs. Charter Communications Cl |
Check out your portfolio center.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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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