Correlation Between Marks and National Beverage
Can any of the company-specific risk be diversified away by investing in both Marks and National Beverage 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 Marks and National Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Marks and Spencer and National Beverage Corp, you can compare the effects of market volatilities on Marks and National Beverage 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 Marks with a short position of National Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marks and National Beverage.
Diversification Opportunities for Marks and National Beverage
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Marks and National is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Marks and Spencer and National Beverage Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Beverage Corp and Marks 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 Marks and Spencer are associated (or correlated) with National Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Beverage Corp has no effect on the direction of Marks i.e., Marks and National Beverage go up and down completely randomly.
Pair Corralation between Marks and National Beverage
Assuming the 90 days horizon Marks and Spencer is expected to generate 1.18 times more return on investment than National Beverage. However, Marks is 1.18 times more volatile than National Beverage Corp. It trades about 0.11 of its potential returns per unit of risk. National Beverage Corp is currently generating about 0.09 per unit of risk. If you would invest 419.00 in Marks and Spencer on September 12, 2024 and sell it today you would earn a total of 56.00 from holding Marks and Spencer or generate 13.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.46% |
| Values | Daily Returns |
Marks and Spencer vs. National Beverage Corp
Performance |
| Timeline |
| Marks and Spencer |
| National Beverage Corp |
Marks and National Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marks and National Beverage
The main advantage of trading using opposite Marks and National Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marks position performs unexpectedly, National Beverage 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 National Beverage will offset losses from the drop in National Beverage's long position.| Marks vs. STRAYER EDUCATION | Marks vs. Sportsmans Warehouse Holdings | Marks vs. JD SPORTS FASH | Marks vs. VIAPLAY GROUP AB |
| National Beverage vs. Superior Plus Corp | National Beverage vs. SIVERS SEMICONDUCTORS AB | National Beverage vs. NorAm Drilling AS | National Beverage vs. Norsk Hydro ASA |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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