Correlation Between Martin Marietta and Universal Display
Can any of the company-specific risk be diversified away by investing in both Martin Marietta and Universal Display 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 Universal Display 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 Universal Display Corp, you can compare the effects of market volatilities on Martin Marietta and Universal Display 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 Universal Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of Martin Marietta and Universal Display.
Diversification Opportunities for Martin Marietta and Universal Display
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Martin and Universal is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Martin Marietta Materials and Universal Display Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Display 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 Universal Display. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Display Corp has no effect on the direction of Martin Marietta i.e., Martin Marietta and Universal Display go up and down completely randomly.
Pair Corralation between Martin Marietta and Universal Display
Assuming the 90 days trading horizon Martin Marietta Materials is expected to generate 0.58 times more return on investment than Universal Display. However, Martin Marietta Materials is 1.74 times less risky than Universal Display. It trades about 0.14 of its potential returns per unit of risk. Universal Display Corp is currently generating about -0.04 per unit of risk. If you would invest 52,439 in Martin Marietta Materials on September 2, 2024 and sell it today you would earn a total of 7,561 from holding Martin Marietta Materials or generate 14.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Martin Marietta Materials vs. Universal Display Corp
Performance |
| Timeline |
| Martin Marietta Materials |
| Universal Display Corp |
Martin Marietta and Universal Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Martin Marietta and Universal Display
The main advantage of trading using opposite Martin Marietta and Universal Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Martin Marietta position performs unexpectedly, Universal Display 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 Universal Display will offset losses from the drop in Universal Display'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 |
| Universal Display vs. Air Products Chemicals | Universal Display vs. Applied Materials | Universal Display vs. Lindsell Train Investment | Universal Display vs. Broadridge Financial Solutions |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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