Correlation Between Marcus and Hollywall Entertainment

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

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

Diversification Opportunities for Marcus and Hollywall Entertainment

-0.7

Correlation Coefficient

Marcus  Hollywall Entertainment

Excellent diversification

The 3 months correlation between Marcus and Hollywall is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Marcus and Hollywall Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hollywall Entertainment and Marcus 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 Marcus are associated (or correlated) with Hollywall Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hollywall Entertainment has no effect on the direction of Marcus i.e., Marcus and Hollywall Entertainment go up and down completely randomly.

Pair Corralation between Marcus and Hollywall Entertainment

Considering the 90-day investment horizon Marcus is expected to generate 0.28 times more return on investment than Hollywall Entertainment. However, Marcus is 3.58 times less risky than Hollywall Entertainment. It trades about 0.35 of its potential returns per unit of risk. Hollywall Entertainment is currently generating about -0.1 per unit of risk. If you would invest  1,405  in Marcus on September 3, 2024 and sell it today you would earn a total of  859.00  from holding Marcus or generate 61.14% return on investment over 90 days.

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

Marcus  vs.  Hollywall Entertainment

Marcus

Risk-Adjusted Performance

27 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Marcus are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental indicators, Marcus unveiled solid returns over the last few months and may actually be approaching a breakup point.

Hollywall Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hollywall Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Marcus and Hollywall Entertainment

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

The idea behind Marcus and Hollywall Entertainment 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.