Correlation Between Marcus and Reading International

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

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

Diversification Opportunities for Marcus and Reading International

0.02

Correlation Coefficient

Marcus  Reading International

Significant diversification

The 3 months correlation between Marcus and Reading is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Marcus and Reading International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reading International and Marcus 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 Marcus are associated (or correlated) with Reading International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reading International has no effect on the direction of Marcus i.e., Marcus and Reading International go up and down completely randomly.

Pair Corralation between Marcus and Reading International

Considering the 90-day investment horizon Marcus is expected to under-perform the Reading International. But the stock apears to be less risky and, when comparing its historical volatility, Marcus is 2.7 times less risky than Reading International. The stock trades about -0.08 of its potential returns per unit of risk. The Reading International is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  151.00  in Reading International on November 28, 2024 and sell it today you would lose (11.00) from holding Reading International or give up 7.28% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Marcus  vs.  Reading International

Marcus

Risk-Adjusted Performance

Very Weak

Over the last 90 days Marcus has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Reading International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Reading International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental indicators, Reading International is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Marcus and Reading International

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

The idea behind Marcus and Reading International 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.