Correlation Between Martin Marietta and MG Credit
Can any of the company-specific risk be diversified away by investing in both Martin Marietta and MG Credit 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 MG Credit 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 MG Credit Income, you can compare the effects of market volatilities on Martin Marietta and MG Credit 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 MG Credit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Martin Marietta and MG Credit.
Diversification Opportunities for Martin Marietta and MG Credit
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Martin and MGCI is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Martin Marietta Materials and MG Credit Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MG Credit Income 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 MG Credit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MG Credit Income has no effect on the direction of Martin Marietta i.e., Martin Marietta and MG Credit go up and down completely randomly.
Pair Corralation between Martin Marietta and MG Credit
Assuming the 90 days trading horizon Martin Marietta Materials is expected to generate 1.13 times more return on investment than MG Credit. However, Martin Marietta is 1.13 times more volatile than MG Credit Income. It trades about 0.07 of its potential returns per unit of risk. MG Credit Income is currently generating about 0.02 per unit of risk. If you would invest 35,233 in Martin Marietta Materials on October 28, 2024 and sell it today you would earn a total of 19,794 from holding Martin Marietta Materials or generate 56.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 92.18% |
| Values | Daily Returns |
Martin Marietta Materials vs. MG Credit Income
Performance |
| Timeline |
| Martin Marietta Materials |
| MG Credit Income |
Martin Marietta and MG Credit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Martin Marietta and MG Credit
The main advantage of trading using opposite Martin Marietta and MG Credit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Martin Marietta position performs unexpectedly, MG Credit 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 MG Credit will offset losses from the drop in MG Credit's long position.| Martin Marietta vs. Berkshire Hathaway | Martin Marietta vs. Samsung Electronics Co | Martin Marietta vs. Samsung Electronics Co | Martin Marietta vs. Chocoladefabriken Lindt Spruengli |
| MG Credit vs. Scandic Hotels Group | MG Credit vs. Europa Metals | MG Credit vs. Jacquet Metal Service | MG Credit vs. Rheinmetall AG |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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