Correlation Between Martin Marietta and JD Sports
Can any of the company-specific risk be diversified away by investing in both Martin Marietta and JD Sports 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 JD Sports 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 JD Sports Fashion, you can compare the effects of market volatilities on Martin Marietta and JD Sports 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 JD Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Martin Marietta and JD Sports.
Diversification Opportunities for Martin Marietta and JD Sports
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Martin and JD Sports is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Martin Marietta Materials and JD Sports Fashion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JD Sports Fashion 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 JD Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JD Sports Fashion has no effect on the direction of Martin Marietta i.e., Martin Marietta and JD Sports go up and down completely randomly.
Pair Corralation between Martin Marietta and JD Sports
Assuming the 90 days trading horizon Martin Marietta Materials is expected to generate 0.53 times more return on investment than JD Sports. However, Martin Marietta Materials is 1.88 times less risky than JD Sports. It trades about 0.07 of its potential returns per unit of risk. JD Sports Fashion is currently generating about -0.02 per unit of risk. If you would invest 42,166 in Martin Marietta Materials on September 1, 2024 and sell it today you would earn a total of 17,834 from holding Martin Marietta Materials or generate 42.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 93.9% |
| Values | Daily Returns |
Martin Marietta Materials vs. JD Sports Fashion
Performance |
| Timeline |
| Martin Marietta Materials |
| JD Sports Fashion |
Martin Marietta and JD Sports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Martin Marietta and JD Sports
The main advantage of trading using opposite Martin Marietta and JD Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Martin Marietta position performs unexpectedly, JD Sports 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 JD Sports will offset losses from the drop in JD Sports' long position.| Martin Marietta vs. AMG Advanced Metallurgical | Martin Marietta vs. Litigation Capital Management | Martin Marietta vs. SBM Offshore NV | Martin Marietta vs. Jupiter Fund Management |
| JD Sports vs. Toyota Motor Corp | JD Sports vs. SoftBank Group Corp | JD Sports vs. OTP Bank Nyrt | JD Sports vs. Las Vegas Sands |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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