Correlation Between Marks Spencer and Ethernity Networks

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

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

Diversification Opportunities for Marks Spencer and Ethernity Networks

0.22

Correlation Coefficient

Marks Spencer  Ethernity Networks

Modest diversification

The 3 months correlation between Marks and Ethernity is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Marks Spencer Group and Ethernity Networks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ethernity Networks and Marks Spencer 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 Marks Spencer Group are associated (or correlated) with Ethernity Networks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ethernity Networks has no effect on the direction of Marks Spencer i.e., Marks Spencer and Ethernity Networks go up and down completely randomly.

Pair Corralation between Marks Spencer and Ethernity Networks

Assuming the 90 days horizon Marks Spencer is expected to generate 9.38 times less return on investment than Ethernity Networks. But when comparing it to its historical volatility, Marks Spencer Group is 22.59 times less risky than Ethernity Networks. It trades about 0.23 of its potential returns per unit of risk. Ethernity Networks is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  3.84  in Ethernity Networks on February 29, 2024 and sell it today you would earn a total of  1.11  from holding Ethernity Networks or generate 28.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Marks Spencer Group  vs.  Ethernity Networks

Marks Spencer Group

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Marks Spencer Group are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Marks Spencer showed solid returns over the last few months and may actually be approaching a breakup point.

Ethernity Networks

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ethernity Networks are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Ethernity Networks reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Marks Spencer and Ethernity Networks

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

The idea behind Marks Spencer Group and Ethernity Networks 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.