Correlation Between Martin Marietta and Volkswagen
Can any of the company-specific risk be diversified away by investing in both Martin Marietta and Volkswagen 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 Volkswagen 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 Volkswagen AG, you can compare the effects of market volatilities on Martin Marietta and Volkswagen 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 Volkswagen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Martin Marietta and Volkswagen.
Diversification Opportunities for Martin Marietta and Volkswagen
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Martin and Volkswagen is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Martin Marietta Materials and Volkswagen AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volkswagen AG 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 Volkswagen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Volkswagen AG has no effect on the direction of Martin Marietta i.e., Martin Marietta and Volkswagen go up and down completely randomly.
Pair Corralation between Martin Marietta and Volkswagen
Assuming the 90 days trading horizon Martin Marietta is expected to generate 2.01 times less return on investment than Volkswagen. In addition to that, Martin Marietta is 1.24 times more volatile than Volkswagen AG. It trades about 0.15 of its total potential returns per unit of risk. Volkswagen AG is currently generating about 0.38 per unit of volatility. If you would invest 9,115 in Volkswagen AG on October 27, 2024 and sell it today you would earn a total of 963.00 from holding Volkswagen AG or generate 10.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 85.0% |
| Values | Daily Returns |
Martin Marietta Materials vs. Volkswagen AG
Performance |
| Timeline |
| Martin Marietta Materials |
| Volkswagen AG |
Martin Marietta and Volkswagen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Martin Marietta and Volkswagen
The main advantage of trading using opposite Martin Marietta and Volkswagen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Martin Marietta position performs unexpectedly, Volkswagen 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 Volkswagen will offset losses from the drop in Volkswagen's long position.| Martin Marietta vs. Batm Advanced Communications | Martin Marietta vs. Aeorema Communications Plc | Martin Marietta vs. Dairy Farm International | Martin Marietta vs. Bell Food Group |
| Volkswagen vs. GreenX Metals | Volkswagen vs. Infrastrutture Wireless Italiane | Volkswagen vs. European Metals Holdings | Volkswagen vs. Europa Metals |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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