Correlation Between Mirriad Advertising and Marchex

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

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

Diversification Opportunities for Mirriad Advertising and Marchex

-0.07

Correlation Coefficient

Mirriad Advertising  Marchex

Good diversification

The 3 months correlation between Mirriad and Marchex is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Mirriad Advertising plc and Marchex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marchex and Mirriad Advertising 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 Mirriad Advertising plc are associated (or correlated) with Marchex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marchex has no effect on the direction of Mirriad Advertising i.e., Mirriad Advertising and Marchex go up and down completely randomly.

Pair Corralation between Mirriad Advertising and Marchex

Assuming the 90 days horizon Mirriad Advertising plc is expected to generate 7.44 times more return on investment than Marchex. However, Mirriad Advertising is 7.44 times more volatile than Marchex. It trades about 0.09 of its potential returns per unit of risk. Marchex is currently generating about -0.03 per unit of risk. If you would invest  0.25  in Mirriad Advertising plc on December 29, 2024 and sell it today you would earn a total of  0.15  from holding Mirriad Advertising plc or generate 60.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.31%
Values	Daily Returns

Mirriad Advertising plc  vs.  Marchex

Mirriad Advertising plc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mirriad Advertising plc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Mirriad Advertising reported solid returns over the last few months and may actually be approaching a breakup point.

Marchex

Risk-Adjusted Performance

Very Weak

Over the last 90 days Marchex has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical indicators, Marchex is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Mirriad Advertising and Marchex

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

The idea behind Mirriad Advertising plc and Marchex 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.