Correlation Between Marstons PLC and Noble Romans

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

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

Diversification Opportunities for Marstons PLC and Noble Romans

-0.18

Correlation Coefficient

Marstons PLC  Noble Romans

Good diversification

The 3 months correlation between Marstons and Noble is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Marstons PLC and Noble Romans in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Noble Romans and Marstons 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 Marstons PLC are associated (or correlated) with Noble Romans. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Noble Romans has no effect on the direction of Marstons PLC i.e., Marstons PLC and Noble Romans go up and down completely randomly.

Pair Corralation between Marstons PLC and Noble Romans

Assuming the 90 days horizon Marstons PLC is expected to generate 6.25 times less return on investment than Noble Romans. But when comparing it to its historical volatility, Marstons PLC is 3.07 times less risky than Noble Romans. It trades about 0.03 of its potential returns per unit of risk. Noble Romans is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  28.00  in Noble Romans on December 29, 2024 and sell it today you would earn a total of  3.00  from holding Noble Romans or generate 10.71% return on investment over 90 days.

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

Marstons PLC  vs.  Noble Romans

Marstons PLC

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Marstons PLC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Marstons PLC may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Noble Romans

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Noble Romans are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Noble Romans displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Marstons PLC and Noble Romans

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

The idea behind Marstons PLC and Noble Romans 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.