Correlation Between Marcus Millichap and Newmark

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

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

Diversification Opportunities for Marcus Millichap and Newmark

0.89

Correlation Coefficient

Marcus Millichap  Newmark

Very poor diversification

The 3 months correlation between Marcus and Newmark is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Marcus Millichap and Newmark Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newmark Group and Marcus Millichap 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 Millichap are associated (or correlated) with Newmark. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newmark Group has no effect on the direction of Marcus Millichap i.e., Marcus Millichap and Newmark go up and down completely randomly.

Pair Corralation between Marcus Millichap and Newmark

Considering the 90-day investment horizon Marcus Millichap is expected to generate 0.86 times more return on investment than Newmark. However, Marcus Millichap is 1.16 times less risky than Newmark. It trades about -0.06 of its potential returns per unit of risk. Newmark Group is currently generating about -0.06 per unit of risk. If you would invest  4,161  in Marcus Millichap on November 29, 2024 and sell it today you would lose (323.00) from holding Marcus Millichap or give up 7.76% of portfolio value over 90 days.

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

Marcus Millichap  vs.  Newmark Group

Marcus Millichap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Marcus Millichap has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's primary indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Newmark Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Newmark Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic 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 Marcus Millichap and Newmark

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

The idea behind Marcus Millichap and Newmark Group 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.