Correlation Between Target Hospitality and Marcus

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

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

Diversification Opportunities for Target Hospitality and Marcus

-0.54

Correlation Coefficient

Target Hospitality  Marcus

Excellent diversification

The 3 months correlation between Target and Marcus is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Target Hospitality Corp and Marcus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marcus and Target Hospitality 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 Target Hospitality Corp are associated (or correlated) with Marcus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marcus has no effect on the direction of Target Hospitality i.e., Target Hospitality and Marcus go up and down completely randomly.

Pair Corralation between Target Hospitality and Marcus

Allowing for the 90-day total investment horizon Target Hospitality Corp is expected to generate 2.58 times more return on investment than Marcus. However, Target Hospitality is 2.58 times more volatile than Marcus. It trades about 0.04 of its potential returns per unit of risk. Marcus is currently generating about 0.0 per unit of risk. If you would invest  733.00  in Target Hospitality Corp on January 25, 2024 and sell it today you would earn a total of  368.00  from holding Target Hospitality Corp or generate 50.2% return on investment over 90 days.

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

Target Hospitality Corp  vs.  Marcus

Target Hospitality Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Target Hospitality Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating technical indicators, Target Hospitality demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Marcus

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Marcus are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, Marcus is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Target Hospitality and Marcus

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

The idea behind Target Hospitality Corp and Marcus 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.