Correlation Between MarineMax and Card Factory

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

By analyzing existing cross correlation between MarineMax and Card Factory plc, you can compare the effects of market volatilities on MarineMax and Card Factory 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 MarineMax with a short position of Card Factory. Check out your portfolio center. Please also check ongoing floating volatility patterns of MarineMax and Card Factory.

Diversification Opportunities for MarineMax and Card Factory

-0.22

Correlation Coefficient

MarineMax  Card Factory

Very good diversification

The 3 months correlation between MarineMax and Card is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding MarineMax and Card Factory plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Card Factory plc and MarineMax 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 MarineMax are associated (or correlated) with Card Factory. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Card Factory plc has no effect on the direction of MarineMax i.e., MarineMax and Card Factory go up and down completely randomly.

Pair Corralation between MarineMax and Card Factory

Considering the 90-day investment horizon MarineMax is expected to under-perform the Card Factory. But the stock apears to be less risky and, when comparing its historical volatility, MarineMax is 2.37 times less risky than Card Factory. The stock trades about -0.22 of its potential returns per unit of risk. The Card Factory plc is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  118.00  in Card Factory plc on October 5, 2024 and sell it today you would earn a total of  37.00  from holding Card Factory plc or generate 31.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

MarineMax  vs.  Card Factory plc

MarineMax

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MarineMax has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, MarineMax is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Card Factory plc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Card Factory plc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent fundamental indicators, Card Factory may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with MarineMax and Card Factory

The main advantage of trading using opposite MarineMax and Card Factory positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MarineMax position performs unexpectedly, Card Factory 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 Card Factory will offset losses from the drop in Card Factory's long position.

The idea behind MarineMax and Card Factory 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.