Correlation Between Marlowe Plc and InsCorp

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

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

Diversification Opportunities for Marlowe Plc and InsCorp

-0.64

Correlation Coefficient

Marlowe Plc  InsCorp

Excellent diversification

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

Pair Corralation between Marlowe Plc and InsCorp

Assuming the 90 days horizon Marlowe plc is expected to under-perform the InsCorp. In addition to that, Marlowe Plc is 2.54 times more volatile than InsCorp. It trades about -0.11 of its total potential returns per unit of risk. InsCorp is currently generating about 0.08 per unit of volatility. If you would invest  2,380  in InsCorp on October 8, 2024 and sell it today you would earn a total of  70.00  from holding InsCorp or generate 2.94% return on investment over 90 days.

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

Marlowe plc  vs.  InsCorp

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 latest abnormal performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

InsCorp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in InsCorp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, InsCorp is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Marlowe Plc and InsCorp

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

The idea behind Marlowe plc and InsCorp 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.