Correlation Between Marstons PLC and Eco Animal
Can any of the company-specific risk be diversified away by investing in both Marstons PLC and Eco Animal 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 Eco Animal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Marstons PLC and Eco Animal Health, you can compare the effects of market volatilities on Marstons PLC and Eco Animal 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 Eco Animal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marstons PLC and Eco Animal.
Diversification Opportunities for Marstons PLC and Eco Animal
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Marstons and Eco is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Marstons PLC and Eco Animal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eco Animal Health 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 Eco Animal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eco Animal Health has no effect on the direction of Marstons PLC i.e., Marstons PLC and Eco Animal go up and down completely randomly.
Pair Corralation between Marstons PLC and Eco Animal
Assuming the 90 days trading horizon Marstons PLC is expected to under-perform the Eco Animal. In addition to that, Marstons PLC is 1.23 times more volatile than Eco Animal Health. It trades about -0.18 of its total potential returns per unit of risk. Eco Animal Health is currently generating about -0.11 per unit of volatility. If you would invest 7,050 in Eco Animal Health on October 12, 2024 and sell it today you would lose (200.00) from holding Eco Animal Health or give up 2.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Marstons PLC vs. Eco Animal Health
Performance |
| Timeline |
| Marstons PLC |
| Eco Animal Health |
Marstons PLC and Eco Animal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marstons PLC and Eco Animal
The main advantage of trading using opposite Marstons PLC and Eco Animal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marstons PLC position performs unexpectedly, Eco Animal 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 Eco Animal will offset losses from the drop in Eco Animal's 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 |
| Eco Animal vs. Pets at Home | Eco Animal vs. Home Depot | Eco Animal vs. bet at home AG | Eco Animal vs. Wheaton Precious Metals |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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