Correlation Between Martin Marietta and Devon Energy
Can any of the company-specific risk be diversified away by investing in both Martin Marietta and Devon Energy 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 Devon Energy 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 Devon Energy Corp, you can compare the effects of market volatilities on Martin Marietta and Devon Energy 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 Devon Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Martin Marietta and Devon Energy.
Diversification Opportunities for Martin Marietta and Devon Energy
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Martin and Devon is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Martin Marietta Materials and Devon Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Devon Energy Corp 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 Devon Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Devon Energy Corp has no effect on the direction of Martin Marietta i.e., Martin Marietta and Devon Energy go up and down completely randomly.
Pair Corralation between Martin Marietta and Devon Energy
Assuming the 90 days trading horizon Martin Marietta Materials is expected to generate 0.76 times more return on investment than Devon Energy. However, Martin Marietta Materials is 1.31 times less risky than Devon Energy. It trades about 0.08 of its potential returns per unit of risk. Devon Energy Corp is currently generating about -0.02 per unit of risk. If you would invest 35,006 in Martin Marietta Materials on September 2, 2024 and sell it today you would earn a total of 24,994 from holding Martin Marietta Materials or generate 71.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 90.52% |
| Values | Daily Returns |
Martin Marietta Materials vs. Devon Energy Corp
Performance |
| Timeline |
| Martin Marietta Materials |
| Devon Energy Corp |
Martin Marietta and Devon Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Martin Marietta and Devon Energy
The main advantage of trading using opposite Martin Marietta and Devon Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Martin Marietta position performs unexpectedly, Devon Energy 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 Devon Energy will offset losses from the drop in Devon Energy's long position.| Martin Marietta vs. Uniper SE | Martin Marietta vs. Mulberry Group PLC | Martin Marietta vs. London Security Plc | Martin Marietta vs. Triad Group PLC |
| Devon Energy vs. MediaZest plc | Devon Energy vs. JD Sports Fashion | Devon Energy vs. Hollywood Bowl Group | Devon Energy vs. Verizon Communications |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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