Correlation Between Robinhood Markets and Marex Group

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

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

Diversification Opportunities for Robinhood Markets and Marex Group

0.92

Correlation Coefficient

Robinhood Markets  Marex Group

Almost no diversification

The 3 months correlation between Robinhood and Marex is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Robinhood Markets and Marex Group plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marex Group plc and Robinhood Markets 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 Robinhood Markets are associated (or correlated) with Marex Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marex Group plc has no effect on the direction of Robinhood Markets i.e., Robinhood Markets and Marex Group go up and down completely randomly.

Pair Corralation between Robinhood Markets and Marex Group

Given the investment horizon of 90 days Robinhood Markets is expected to generate 2.57 times more return on investment than Marex Group. However, Robinhood Markets is 2.57 times more volatile than Marex Group plc. It trades about 0.22 of its potential returns per unit of risk. Marex Group plc is currently generating about 0.21 per unit of risk. If you would invest  2,164  in Robinhood Markets on September 12, 2024 and sell it today you would earn a total of  1,572  from holding Robinhood Markets or generate 72.64% return on investment over 90 days.

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

Robinhood Markets  vs.  Marex Group plc

Robinhood Markets

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Robinhood Markets are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Robinhood Markets exhibited solid returns over the last few months and may actually be approaching a breakup point.

Marex Group plc

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Marex Group plc are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Marex Group showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Robinhood Markets and Marex Group

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

The idea behind Robinhood Markets and Marex Group 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.