Correlation Between Marstons PLC and Noodles

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

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

Diversification Opportunities for Marstons PLC and Noodles

0.59

Correlation Coefficient

Marstons PLC  Noodles

Very weak diversification

The 3 months correlation between Marstons and Noodles is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Marstons PLC and Noodles Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Noodles Company and Marstons 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 Marstons PLC are associated (or correlated) with Noodles. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Noodles Company has no effect on the direction of Marstons PLC i.e., Marstons PLC and Noodles go up and down completely randomly.

Pair Corralation between Marstons PLC and Noodles

Assuming the 90 days horizon Marstons PLC is expected to generate 0.22 times more return on investment than Noodles. However, Marstons PLC is 4.46 times less risky than Noodles. It trades about -0.15 of its potential returns per unit of risk. Noodles Company is currently generating about -0.17 per unit of risk. If you would invest  57.00  in Marstons PLC on September 13, 2024 and sell it today you would lose (6.00) from holding Marstons PLC or give up 10.53% of portfolio value over 90 days.

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

Marstons PLC  vs.  Noodles Company

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 latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

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.

Pair Trading with Marstons PLC and Noodles

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

The idea behind Marstons PLC and Noodles Company 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.