Correlation Between High Tide and MarineMax

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

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

Diversification Opportunities for High Tide and MarineMax

-0.43

Correlation Coefficient

High Tide  MarineMax

Very good diversification

The 3 months correlation between High and MarineMax is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding High Tide and MarineMax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MarineMax and High Tide 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 High Tide are associated (or correlated) with MarineMax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MarineMax has no effect on the direction of High Tide i.e., High Tide and MarineMax go up and down completely randomly.

Pair Corralation between High Tide and MarineMax

Given the investment horizon of 90 days High Tide is expected to generate 1.45 times more return on investment than MarineMax. However, High Tide is 1.45 times more volatile than MarineMax. It trades about 0.18 of its potential returns per unit of risk. MarineMax is currently generating about 0.14 per unit of risk. If you would invest  257.00  in High Tide on September 19, 2024 and sell it today you would earn a total of  46.00  from holding High Tide or generate 17.9% return on investment over 90 days.

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

High Tide  vs.  MarineMax

High Tide

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in High Tide are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, High Tide demonstrated solid returns over the last few months and may actually be approaching a breakup point.

MarineMax

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MarineMax has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with High Tide and MarineMax

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

The idea behind High Tide and MarineMax 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.