Correlation Between Marlowe Plc and SCHNITZER STEEL

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

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

Diversification Opportunities for Marlowe Plc and SCHNITZER STEEL

-0.45

Correlation Coefficient

Marlowe Plc  SCHNITZER STEEL

Very good diversification

The 3 months correlation between Marlowe and SCHNITZER is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Marlowe plc and SCHNITZER STEEL INDUSTRIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCHNITZER STEEL INDU 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 SCHNITZER STEEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCHNITZER STEEL INDU has no effect on the direction of Marlowe Plc i.e., Marlowe Plc and SCHNITZER STEEL go up and down completely randomly.

Pair Corralation between Marlowe Plc and SCHNITZER STEEL

Assuming the 90 days horizon Marlowe Plc is expected to generate 1.09 times less return on investment than SCHNITZER STEEL. In addition to that, Marlowe Plc is 2.37 times more volatile than SCHNITZER STEEL INDUSTRIES. It trades about 0.03 of its total potential returns per unit of risk. SCHNITZER STEEL INDUSTRIES is currently generating about 0.08 per unit of volatility. If you would invest  2,819  in SCHNITZER STEEL INDUSTRIES on October 5, 2024 and sell it today you would earn a total of  458.00  from holding SCHNITZER STEEL INDUSTRIES or generate 16.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	20.04%
Values	Daily Returns

Marlowe plc  vs.  SCHNITZER STEEL INDUSTRIES

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 February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

SCHNITZER STEEL INDU

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SCHNITZER STEEL INDUSTRIES has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical indicators, SCHNITZER STEEL is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Marlowe Plc and SCHNITZER STEEL

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

The idea behind Marlowe plc and SCHNITZER STEEL INDUSTRIES 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 Commodity Directory module to find actively traded commodities issued by global exchanges.