Correlation Between Marstons PLC and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Marstons PLC and Dow Jones 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 Marstons PLC and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Marstons PLC and Dow Jones Industrial, you can compare the effects of market volatilities on Marstons PLC and Dow Jones 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 Marstons PLC with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marstons PLC and Dow Jones.
Diversification Opportunities for Marstons PLC and Dow Jones
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Marstons and Dow is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Marstons PLC and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Marstons PLC 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 Marstons PLC are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Marstons PLC i.e., Marstons PLC and Dow Jones go up and down completely randomly.
Pair Corralation between Marstons PLC and Dow Jones
Assuming the 90 days trading horizon Marstons PLC is expected to under-perform the Dow Jones. In addition to that, Marstons PLC is 1.86 times more volatile than Dow Jones Industrial. It trades about -0.18 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about -0.29 per unit of volatility. If you would invest 4,414,856 in Dow Jones Industrial on October 12, 2024 and sell it today you would lose (221,011) from holding Dow Jones Industrial or give up 5.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Marstons PLC vs. Dow Jones Industrial
Performance |
| Timeline |
Marstons PLC and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Marstons PLC
Pair trading matchups for Marstons PLC
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Marstons PLC and Dow Jones
The main advantage of trading using opposite Marstons PLC and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marstons PLC position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Marstons PLC vs. Eco Animal Health | Marstons PLC vs. Omega Healthcare Investors | Marstons PLC vs. Sovereign Metals | Marstons PLC vs. Trellus Health plc |
| Dow Jones vs. Lululemon Athletica | Dow Jones vs. Vistra Energy Corp | Dow Jones vs. The Gap, | Dow Jones vs. Pool Corporation |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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