Correlation Between Trellus Health and Marstons PLC
Can any of the company-specific risk be diversified away by investing in both Trellus Health and Marstons PLC 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 Trellus Health and Marstons PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Trellus Health plc and Marstons PLC, you can compare the effects of market volatilities on Trellus Health and Marstons PLC 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 Trellus Health with a short position of Marstons PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trellus Health and Marstons PLC.
Diversification Opportunities for Trellus Health and Marstons PLC
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Trellus and Marstons is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Trellus Health plc and Marstons PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marstons PLC and Trellus Health 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 Trellus Health plc are associated (or correlated) with Marstons PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marstons PLC has no effect on the direction of Trellus Health i.e., Trellus Health and Marstons PLC go up and down completely randomly.
Pair Corralation between Trellus Health and Marstons PLC
Assuming the 90 days trading horizon Trellus Health plc is expected to under-perform the Marstons PLC. In addition to that, Trellus Health is 2.19 times more volatile than Marstons PLC. It trades about -0.08 of its total potential returns per unit of risk. Marstons PLC is currently generating about 0.01 per unit of volatility. If you would invest 4,086 in Marstons PLC on October 12, 2024 and sell it today you would lose (26.00) from holding Marstons PLC or give up 0.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Trellus Health plc vs. Marstons PLC
Performance |
| Timeline |
| Trellus Health plc |
| Marstons PLC |
Trellus Health and Marstons PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Trellus Health and Marstons PLC
The main advantage of trading using opposite Trellus Health and Marstons PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trellus Health position performs unexpectedly, Marstons PLC 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 Marstons PLC will offset losses from the drop in Marstons PLC's long position.| Trellus Health vs. Berkshire Hathaway | Trellus Health vs. Samsung Electronics Co | Trellus Health vs. Samsung Electronics Co | Trellus Health vs. Chocoladefabriken Lindt Spruengli |
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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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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