Correlation Between Marstons PLC and Bowlin Travel

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

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

Diversification Opportunities for Marstons PLC and Bowlin Travel

0.01

Correlation Coefficient

Marstons PLC  Bowlin Travel

Significant diversification

The 3 months correlation between Marstons and Bowlin is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Marstons PLC and Bowlin Travel Centers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bowlin Travel Centers 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 Bowlin Travel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bowlin Travel Centers has no effect on the direction of Marstons PLC i.e., Marstons PLC and Bowlin Travel go up and down completely randomly.

Pair Corralation between Marstons PLC and Bowlin Travel

If you would invest  51.00  in Marstons PLC on October 4, 2024 and sell it today you would earn a total of  4.00  from holding Marstons PLC or generate 7.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Marstons PLC  vs.  Bowlin Travel Centers

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 nearly stable basic indicators, Marstons PLC is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Bowlin Travel Centers

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bowlin Travel Centers are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Bowlin Travel may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Marstons PLC and Bowlin Travel

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

The idea behind Marstons PLC and Bowlin Travel Centers 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.