Correlation Between Marstons PLC and Flanigans Enterprises

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

By analyzing existing cross correlation between Marstons PLC and Flanigans Enterprises, you can compare the effects of market volatilities on Marstons PLC and Flanigans Enterprises 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 Flanigans Enterprises. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marstons PLC and Flanigans Enterprises.

Diversification Opportunities for Marstons PLC and Flanigans Enterprises

0.31

Correlation Coefficient

Marstons PLC  Flanigans Enterprises

Weak diversification

The 3 months correlation between Marstons and Flanigans is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Marstons PLC and Flanigans Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flanigans Enterprises 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 Flanigans Enterprises. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flanigans Enterprises has no effect on the direction of Marstons PLC i.e., Marstons PLC and Flanigans Enterprises go up and down completely randomly.

Pair Corralation between Marstons PLC and Flanigans Enterprises

Assuming the 90 days horizon Marstons PLC is expected to generate 28.04 times less return on investment than Flanigans Enterprises. But when comparing it to its historical volatility, Marstons PLC is 22.45 times less risky than Flanigans Enterprises. It trades about 0.07 of its potential returns per unit of risk. Flanigans Enterprises is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  2,554  in Flanigans Enterprises on September 5, 2024 and sell it today you would lose (103.00) from holding Flanigans Enterprises or give up 4.03% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	90.48%
Values	Daily Returns

Marstons PLC  vs.  Flanigans Enterprises

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. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Flanigans Enterprises

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Flanigans Enterprises has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Marstons PLC and Flanigans Enterprises

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

The idea behind Marstons PLC and Flanigans Enterprises 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.