Correlation Between Mistras and Marlowe Plc

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

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

Diversification Opportunities for Mistras and Marlowe Plc

0.08

Correlation Coefficient

Mistras  Marlowe Plc

Significant diversification

The 3 months correlation between Mistras and Marlowe is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Mistras Group and Marlowe plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marlowe plc and Mistras 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 Mistras Group are associated (or correlated) with Marlowe Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marlowe plc has no effect on the direction of Mistras i.e., Mistras and Marlowe Plc go up and down completely randomly.

Pair Corralation between Mistras and Marlowe Plc

Allowing for the 90-day total investment horizon Mistras Group is expected to generate 1.41 times more return on investment than Marlowe Plc. However, Mistras is 1.41 times more volatile than Marlowe plc. It trades about -0.01 of its potential returns per unit of risk. Marlowe plc is currently generating about -0.28 per unit of risk. If you would invest  912.00  in Mistras Group on September 20, 2024 and sell it today you would lose (4.00) from holding Mistras Group or give up 0.44% of portfolio value over 90 days.

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

Mistras Group  vs.  Marlowe plc

Mistras Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mistras Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Marlowe plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Marlowe plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Mistras and Marlowe Plc

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

The idea behind Mistras Group and Marlowe 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.