Correlation Between Bagger Daves and Marstons PLC

Can any of the company-specific risk be diversified away by investing in both Bagger Daves 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 Bagger Daves and Marstons PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bagger Daves Burger and Marstons PLC, you can compare the effects of market volatilities on Bagger Daves 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 Bagger Daves with a short position of Marstons PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bagger Daves and Marstons PLC.

Diversification Opportunities for Bagger Daves and Marstons PLC

-0.47

Correlation Coefficient

Bagger Daves  Marstons PLC

Very good diversification

The 3 months correlation between Bagger and Marstons is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Bagger Daves Burger and Marstons PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marstons PLC and Bagger Daves 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 Bagger Daves Burger 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 Bagger Daves i.e., Bagger Daves and Marstons PLC go up and down completely randomly.

Pair Corralation between Bagger Daves and Marstons PLC

Given the investment horizon of 90 days Bagger Daves Burger is expected to under-perform the Marstons PLC. In addition to that, Bagger Daves is 2.67 times more volatile than Marstons PLC. It trades about -0.11 of its total potential returns per unit of risk. Marstons PLC is currently generating about 0.03 per unit of volatility. If you would invest  56.00  in Marstons PLC on December 2, 2024 and sell it today you would earn a total of  1.00  from holding Marstons PLC or generate 1.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Bagger Daves Burger  vs.  Marstons PLC

Bagger Daves Burger

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bagger Daves Burger has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Marstons PLC

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Marstons PLC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Marstons PLC is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Bagger Daves and Marstons PLC

The main advantage of trading using opposite Bagger Daves and Marstons PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bagger Daves 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.

The idea behind Bagger Daves Burger and Marstons PLC 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.

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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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.