Correlation Between Revolution Beauty and Marstons PLC

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

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

Diversification Opportunities for Revolution Beauty and Marstons PLC

0.3

Correlation Coefficient

Revolution Beauty  Marstons PLC

Weak diversification

The 3 months correlation between Revolution and Marstons is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Revolution Beauty Group and Marstons PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marstons PLC and Revolution Beauty 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 Revolution Beauty Group 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 Revolution Beauty i.e., Revolution Beauty and Marstons PLC go up and down completely randomly.

Pair Corralation between Revolution Beauty and Marstons PLC

Assuming the 90 days trading horizon Revolution Beauty is expected to generate 6.88 times less return on investment than Marstons PLC. In addition to that, Revolution Beauty is 1.57 times more volatile than Marstons PLC. It trades about 0.0 of its total potential returns per unit of risk. Marstons PLC is currently generating about 0.02 per unit of volatility. If you would invest  3,926  in Marstons PLC on September 23, 2024 and sell it today you would earn a total of  624.00  from holding Marstons PLC or generate 15.89% return on investment over 90 days.

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

Revolution Beauty Group  vs.  Marstons PLC

Revolution Beauty

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Revolution Beauty Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic 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.

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 unsteady basic indicators, Marstons PLC unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Revolution Beauty and Marstons PLC

The main advantage of trading using opposite Revolution Beauty and Marstons PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Revolution Beauty 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 Revolution Beauty Group 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.