Correlation Between Pets At and MusicMagpie PLC

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

By analyzing existing cross correlation between Pets at Home and musicMagpie PLC, you can compare the effects of market volatilities on Pets At and MusicMagpie 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 Pets At with a short position of MusicMagpie PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pets At and MusicMagpie PLC.

Diversification Opportunities for Pets At and MusicMagpie PLC

-0.07

Correlation Coefficient

Pets At  MusicMagpie PLC

Good diversification

The 3 months correlation between Pets and MusicMagpie is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Pets at Home and musicMagpie PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on musicMagpie PLC and Pets At 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 Pets at Home are associated (or correlated) with MusicMagpie PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of musicMagpie PLC has no effect on the direction of Pets At i.e., Pets At and MusicMagpie PLC go up and down completely randomly.

Pair Corralation between Pets At and MusicMagpie PLC

Assuming the 90 days trading horizon Pets at Home is expected to generate 0.8 times more return on investment than MusicMagpie PLC. However, Pets at Home is 1.25 times less risky than MusicMagpie PLC. It trades about 0.1 of its potential returns per unit of risk. musicMagpie PLC is currently generating about -0.01 per unit of risk. If you would invest  22,456  in Pets at Home on April 23, 2025 and sell it today you would earn a total of  1,884  from holding Pets at Home or generate 8.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.77%
Values	Daily Returns

Pets at Home  vs.  musicMagpie PLC

Pets at Home

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pets at Home are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Pets At may actually be approaching a critical reversion point that can send shares even higher in August 2025.

musicMagpie PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days musicMagpie PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, MusicMagpie PLC 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 Pets At and MusicMagpie PLC

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

The idea behind Pets at Home and musicMagpie 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.