Correlation Between Marks and Carsales
Can any of the company-specific risk be diversified away by investing in both Marks and Carsales 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 Carsales 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 CarsalesCom, you can compare the effects of market volatilities on Marks and Carsales 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 Carsales. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marks and Carsales.
Diversification Opportunities for Marks and Carsales
Very weak diversification
The 3 months correlation between Marks and Carsales is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Marks and Spencer and CarsalesCom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CarsalesCom 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 Carsales. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CarsalesCom has no effect on the direction of Marks i.e., Marks and Carsales go up and down completely randomly.
Pair Corralation between Marks and Carsales
Assuming the 90 days horizon Marks and Spencer is expected to generate 1.17 times more return on investment than Carsales. However, Marks is 1.17 times more volatile than CarsalesCom. It trades about 0.12 of its potential returns per unit of risk. CarsalesCom is currently generating about 0.09 per unit of risk. If you would invest 361.00 in Marks and Spencer on September 5, 2024 and sell it today you would earn a total of 108.00 from holding Marks and Spencer or generate 29.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Marks and Spencer vs. CarsalesCom
Performance |
| Timeline |
| Marks and Spencer |
| CarsalesCom |
Marks and Carsales Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marks and Carsales
The main advantage of trading using opposite Marks and Carsales positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marks position performs unexpectedly, Carsales 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 Carsales will offset losses from the drop in Carsales' long position.| Marks vs. CarsalesCom | Marks vs. MAVEN WIRELESS SWEDEN | Marks vs. Entravision Communications | Marks vs. TRADEGATE |
| Carsales vs. Fast Retailing Co | Carsales vs. Vastned Retail NV | Carsales vs. DiamondRock Hospitality | Carsales vs. Bumrungrad Hospital Public |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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