Correlation Between Marks and Northern Bear
Can any of the company-specific risk be diversified away by investing in both Marks and Northern Bear 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 Northern Bear 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 Northern Bear Plc, you can compare the effects of market volatilities on Marks and Northern Bear 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 Northern Bear. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marks and Northern Bear.
Diversification Opportunities for Marks and Northern Bear
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Marks and Northern is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Marks and Spencer and Northern Bear Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Bear Plc 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 Northern Bear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Bear Plc has no effect on the direction of Marks i.e., Marks and Northern Bear go up and down completely randomly.
Pair Corralation between Marks and Northern Bear
Assuming the 90 days trading horizon Marks and Spencer is expected to generate 0.6 times more return on investment than Northern Bear. However, Marks and Spencer is 1.67 times less risky than Northern Bear. It trades about 0.14 of its potential returns per unit of risk. Northern Bear Plc is currently generating about 0.03 per unit of risk. If you would invest 12,267 in Marks and Spencer on September 19, 2024 and sell it today you would earn a total of 26,623 from holding Marks and Spencer or generate 217.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.2% |
| Values | Daily Returns |
Marks and Spencer vs. Northern Bear Plc
Performance |
| Timeline |
| Marks and Spencer |
| Northern Bear Plc |
Marks and Northern Bear Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marks and Northern Bear
The main advantage of trading using opposite Marks and Northern Bear positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marks position performs unexpectedly, Northern Bear 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 Northern Bear will offset losses from the drop in Northern Bear's long position.| Marks vs. Kaufman Et Broad | Marks vs. LPKF Laser Electronics | Marks vs. Southern Copper Corp | Marks vs. Fevertree Drinks Plc |
| Northern Bear vs. Summit Materials Cl | Northern Bear vs. Molson Coors Beverage | Northern Bear vs. Axway Software SA | Northern Bear vs. Ecclesiastical Insurance Office |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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