Correlation Between Marine Products and Clarus Corp

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

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

Diversification Opportunities for Marine Products and Clarus Corp

0.64

Correlation Coefficient

Marine Products  Clarus Corp

Poor diversification

The 3 months correlation between Marine and Clarus is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Marine Products and Clarus Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clarus Corp and Marine Products 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 Marine Products are associated (or correlated) with Clarus Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clarus Corp has no effect on the direction of Marine Products i.e., Marine Products and Clarus Corp go up and down completely randomly.

Pair Corralation between Marine Products and Clarus Corp

Considering the 90-day investment horizon Marine Products is expected to generate 0.61 times more return on investment than Clarus Corp. However, Marine Products is 1.64 times less risky than Clarus Corp. It trades about 0.14 of its potential returns per unit of risk. Clarus Corp is currently generating about 0.06 per unit of risk. If you would invest  930.00  in Marine Products on September 5, 2024 and sell it today you would earn a total of  50.00  from holding Marine Products or generate 5.38% return on investment over 90 days.

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

Marine Products  vs.  Clarus Corp

Marine Products

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Marine Products are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Marine Products may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Clarus Corp

Risk-Adjusted Performance

5 of 100

Modest

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

Pair Trading with Marine Products and Clarus Corp

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

The idea behind Marine Products and Clarus Corp 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.