Correlation Between XLMedia PLC and Marstons PLC

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

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

Diversification Opportunities for XLMedia PLC and Marstons PLC

-0.59

Correlation Coefficient

XLMedia PLC  Marstons PLC

Excellent diversification

The 3 months correlation between XLMedia and Marstons is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding XLMedia PLC and Marstons PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marstons PLC and XLMedia 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 XLMedia PLC 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 XLMedia PLC i.e., XLMedia PLC and Marstons PLC go up and down completely randomly.

Pair Corralation between XLMedia PLC and Marstons PLC

Assuming the 90 days trading horizon XLMedia PLC is expected to under-perform the Marstons PLC. In addition to that, XLMedia PLC is 2.4 times more volatile than Marstons PLC. It trades about -0.21 of its total potential returns per unit of risk. Marstons PLC is currently generating about 0.34 per unit of volatility. If you would invest  3,925  in Marstons PLC on September 23, 2024 and sell it today you would earn a total of  625.00  from holding Marstons PLC or generate 15.92% return on investment over 90 days.

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

XLMedia PLC  vs.  Marstons PLC

XLMedia PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days XLMedia PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, XLMedia PLC is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Marstons PLC

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Marstons PLC are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Marstons PLC unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with XLMedia PLC and Marstons PLC

The main advantage of trading using opposite XLMedia PLC and Marstons PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XLMedia PLC 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 XLMedia PLC 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.

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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..