Correlation Between Martin Marietta and Investment
Can any of the company-specific risk be diversified away by investing in both Martin Marietta and Investment 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 Investment 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 The Investment, you can compare the effects of market volatilities on Martin Marietta and Investment 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 Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Martin Marietta and Investment.
Diversification Opportunities for Martin Marietta and Investment
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Martin and Investment is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Martin Marietta Materials and The Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investment 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 Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investment has no effect on the direction of Martin Marietta i.e., Martin Marietta and Investment go up and down completely randomly.
Pair Corralation between Martin Marietta and Investment
Assuming the 90 days trading horizon Martin Marietta Materials is expected to generate 32.38 times more return on investment than Investment. However, Martin Marietta is 32.38 times more volatile than The Investment. It trades about 0.06 of its potential returns per unit of risk. The Investment is currently generating about 0.21 per unit of risk. If you would invest 58,809 in Martin Marietta Materials on September 2, 2024 and sell it today you would earn a total of 1,191 from holding Martin Marietta Materials or generate 2.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Martin Marietta Materials vs. The Investment
Performance |
| Timeline |
| Martin Marietta Materials |
| Investment |
Martin Marietta and Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Martin Marietta and Investment
The main advantage of trading using opposite Martin Marietta and Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Martin Marietta position performs unexpectedly, Investment 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 Investment will offset losses from the drop in Investment'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 |
| Investment vs. Host Hotels Resorts | Investment vs. EVS Broadcast Equipment | Investment vs. Kaufman Et Broad | Investment vs. Broadcom |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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