Correlation Between Martin Marietta and American Tower
Can any of the company-specific risk be diversified away by investing in both Martin Marietta and American Tower 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 Martin Marietta and American Tower into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Martin Marietta Materials and American Tower REIT, you can compare the effects of market volatilities on Martin Marietta and American Tower 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 Martin Marietta with a short position of American Tower. Check out your portfolio center. Please also check ongoing floating volatility patterns of Martin Marietta and American Tower.
Diversification Opportunities for Martin Marietta and American Tower
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Martin and American is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Martin Marietta Materials and American Tower REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Tower REIT and Martin Marietta 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 Martin Marietta Materials are associated (or correlated) with American Tower. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Tower REIT has no effect on the direction of Martin Marietta i.e., Martin Marietta and American Tower go up and down completely randomly.
Pair Corralation between Martin Marietta and American Tower
Assuming the 90 days trading horizon Martin Marietta Materials is expected to generate 1.02 times more return on investment than American Tower. However, Martin Marietta is 1.02 times more volatile than American Tower REIT. It trades about 0.04 of its potential returns per unit of risk. American Tower REIT is currently generating about -0.02 per unit of risk. If you would invest 57,939 in Martin Marietta Materials on September 5, 2024 and sell it today you would earn a total of 733.00 from holding Martin Marietta Materials or generate 1.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Martin Marietta Materials vs. American Tower REIT
Performance |
| Timeline |
| Martin Marietta Materials |
| American Tower REIT |
Martin Marietta and American Tower Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Martin Marietta and American Tower
The main advantage of trading using opposite Martin Marietta and American Tower positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Martin Marietta position performs unexpectedly, American Tower 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 American Tower will offset losses from the drop in American Tower's long position.| Martin Marietta vs. Samsung Electronics Co | Martin Marietta vs. Samsung Electronics Co | Martin Marietta vs. Hyundai Motor | Martin Marietta vs. Toyota Motor Corp |
| American Tower vs. Samsung Electronics Co | American Tower vs. Samsung Electronics Co | American Tower vs. Hyundai Motor | American Tower vs. Toyota Motor Corp |
Check out your portfolio center.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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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