Correlation Between Marstons PLC and Mobile Tornado

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

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

Diversification Opportunities for Marstons PLC and Mobile Tornado

-0.57

Correlation Coefficient

Marstons PLC  Mobile Tornado

Excellent diversification

The 3 months correlation between Marstons and Mobile is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Marstons PLC and Mobile Tornado Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mobile Tornado Group and Marstons PLC 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 Marstons PLC are associated (or correlated) with Mobile Tornado. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mobile Tornado Group has no effect on the direction of Marstons PLC i.e., Marstons PLC and Mobile Tornado go up and down completely randomly.

Pair Corralation between Marstons PLC and Mobile Tornado

Assuming the 90 days trading horizon Marstons PLC is expected to under-perform the Mobile Tornado. In addition to that, Marstons PLC is 1.27 times more volatile than Mobile Tornado Group. It trades about -0.24 of its total potential returns per unit of risk. Mobile Tornado Group is currently generating about 0.01 per unit of volatility. If you would invest  140.00  in Mobile Tornado Group on October 15, 2024 and sell it today you would earn a total of  0.00  from holding Mobile Tornado Group or generate 0.0% return on investment over 90 days.

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

Marstons PLC  vs.  Mobile Tornado Group

Marstons PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Marstons PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Marstons PLC is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Mobile Tornado Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mobile Tornado Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Mobile Tornado is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Marstons PLC and Mobile Tornado

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

The idea behind Marstons PLC and Mobile Tornado Group 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.