Correlation Between Impax Asset and Marstons PLC

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

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

Diversification Opportunities for Impax Asset and Marstons PLC

-0.24

Correlation Coefficient

Impax Asset  Marstons PLC

Very good diversification

The 3 months correlation between Impax and Marstons is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Impax Asset Management and Marstons PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marstons PLC and Impax Asset 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 Impax Asset Management 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 Impax Asset i.e., Impax Asset and Marstons PLC go up and down completely randomly.

Pair Corralation between Impax Asset and Marstons PLC

Assuming the 90 days trading horizon Impax Asset Management is expected to under-perform the Marstons PLC. In addition to that, Impax Asset is 1.19 times more volatile than Marstons PLC. It trades about -0.06 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  4,210  in Marstons PLC on October 5, 2024 and sell it today you would earn a total of  160.00  from holding Marstons PLC or generate 3.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Impax Asset Management  vs.  Marstons PLC

Impax Asset Management

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Impax Asset Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Marstons PLC

Risk-Adjusted Performance

1 of 100

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. In spite of comparatively stable basic indicators, Marstons PLC is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Impax Asset and Marstons PLC

The main advantage of trading using opposite Impax Asset and Marstons PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Impax Asset 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 Impax Asset Management 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.