Correlation Between Noodles and Marstons PLC

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

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

Diversification Opportunities for Noodles and Marstons PLC

0.61

Correlation Coefficient

Noodles  Marstons PLC

Poor diversification

The 3 months correlation between Noodles and Marstons is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Noodles Company and Marstons PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marstons PLC and Noodles 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 Noodles Company are associated (or correlated) with Marstons PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marstons PLC has no effect on the direction of Noodles i.e., Noodles and Marstons PLC go up and down completely randomly.

Pair Corralation between Noodles and Marstons PLC

Given the investment horizon of 90 days Noodles Company is expected to under-perform the Marstons PLC. In addition to that, Noodles is 21.41 times more volatile than Marstons PLC. It trades about -0.24 of its total potential returns per unit of risk. Marstons PLC is currently generating about -0.12 per unit of volatility. If you would invest  57.00  in Marstons PLC on September 2, 2024 and sell it today you would lose (1.00) from holding Marstons PLC or give up 1.75% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

Noodles Company  vs.  Marstons PLC

Noodles Company

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Noodles Company has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's essential indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Marstons PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Marstons PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Marstons PLC is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Noodles and Marstons PLC

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

The idea behind Noodles Company and Marstons PLC 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.

Check out your portfolio center.

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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.