Correlation Between Marex Group and MDB Capital

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

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

Diversification Opportunities for Marex Group and MDB Capital

-0.21

Correlation Coefficient

Marex Group  MDB Capital

Very good diversification

The 3 months correlation between Marex and MDB is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Marex Group plc and MDB Capital Holdings, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MDB Capital Holdings, and Marex Group 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 Marex Group plc are associated (or correlated) with MDB Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MDB Capital Holdings, has no effect on the direction of Marex Group i.e., Marex Group and MDB Capital go up and down completely randomly.

Pair Corralation between Marex Group and MDB Capital

Considering the 90-day investment horizon Marex Group plc is expected to generate 0.53 times more return on investment than MDB Capital. However, Marex Group plc is 1.88 times less risky than MDB Capital. It trades about 0.13 of its potential returns per unit of risk. MDB Capital Holdings, is currently generating about -0.02 per unit of risk. If you would invest  1,880  in Marex Group plc on October 9, 2024 and sell it today you would earn a total of  1,372  from holding Marex Group plc or generate 72.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	54.77%
Values	Daily Returns

Marex Group plc  vs.  MDB Capital Holdings,

Marex Group plc

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Marex Group plc are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Marex Group showed solid returns over the last few months and may actually be approaching a breakup point.

MDB Capital Holdings,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MDB Capital Holdings, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental drivers, MDB Capital is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Marex Group and MDB Capital

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

The idea behind Marex Group plc and MDB Capital Holdings, 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.