Correlation Between Sears Canada and Marks
Can any of the company-specific risk be diversified away by investing in both Sears Canada and Marks 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 Sears Canada and Marks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sears Canada and Marks and Spencer, you can compare the effects of market volatilities on Sears Canada and Marks 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 Sears Canada with a short position of Marks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sears Canada and Marks.
Diversification Opportunities for Sears Canada and Marks
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Sears and Marks is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Sears Canada and Marks and Spencer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marks and Spencer and Sears Canada 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 Sears Canada are associated (or correlated) with Marks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marks and Spencer has no effect on the direction of Sears Canada i.e., Sears Canada and Marks go up and down completely randomly.
Pair Corralation between Sears Canada and Marks
If you would invest 146.00 in Marks and Spencer on August 30, 2024 and sell it today you would earn a total of 299.00 from holding Marks and Spencer or generate 204.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 12.2% |
| Values | Daily Returns |
Sears Canada vs. Marks and Spencer
Performance |
| Timeline |
| Sears Canada |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Marks and Spencer |
Sears Canada and Marks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sears Canada and Marks
The main advantage of trading using opposite Sears Canada and Marks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sears Canada position performs unexpectedly, Marks 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 Marks will offset losses from the drop in Marks' long position.The idea behind Sears Canada and Marks and Spencer pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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