Correlation Between Target and Marks Spencer

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

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

Diversification Opportunities for Target and Marks Spencer

-0.7

Correlation Coefficient

Target  Marks Spencer

Excellent diversification

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

Pair Corralation between Target and Marks Spencer

Considering the 90-day investment horizon Target is expected to generate 1.16 times more return on investment than Marks Spencer. However, Target is 1.16 times more volatile than Marks Spencer Group. It trades about -0.04 of its potential returns per unit of risk. Marks Spencer Group is currently generating about -0.08 per unit of risk. If you would invest  10,160  in Target on May 6, 2025 and sell it today you would lose (183.00) from holding Target or give up 1.8% of portfolio value over 90 days.

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

Target  vs.  Marks Spencer Group

Target

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Target are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Target may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Marks Spencer Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Marks Spencer Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Marks Spencer is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Target and Marks Spencer

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

The idea behind Target and Marks Spencer Group 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.