Correlation Between Martin Marietta and Virgin Wines
Can any of the company-specific risk be diversified away by investing in both Martin Marietta and Virgin Wines 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 Virgin Wines 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 Virgin Wines UK, you can compare the effects of market volatilities on Martin Marietta and Virgin Wines 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 Virgin Wines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Martin Marietta and Virgin Wines.
Diversification Opportunities for Martin Marietta and Virgin Wines
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Martin and Virgin is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Martin Marietta Materials and Virgin Wines UK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virgin Wines UK 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 Virgin Wines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virgin Wines UK has no effect on the direction of Martin Marietta i.e., Martin Marietta and Virgin Wines go up and down completely randomly.
Pair Corralation between Martin Marietta and Virgin Wines
Assuming the 90 days trading horizon Martin Marietta Materials is expected to under-perform the Virgin Wines. But the stock apears to be less risky and, when comparing its historical volatility, Martin Marietta Materials is 1.06 times less risky than Virgin Wines. The stock trades about -0.28 of its potential returns per unit of risk. The Virgin Wines UK is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 3,400 in Virgin Wines UK on October 12, 2024 and sell it today you would lose (100.00) from holding Virgin Wines UK or give up 2.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 89.47% |
| Values | Daily Returns |
Martin Marietta Materials vs. Virgin Wines UK
Performance |
| Timeline |
| Martin Marietta Materials |
| Virgin Wines UK |
Martin Marietta and Virgin Wines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Martin Marietta and Virgin Wines
The main advantage of trading using opposite Martin Marietta and Virgin Wines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Martin Marietta position performs unexpectedly, Virgin Wines 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 Virgin Wines will offset losses from the drop in Virgin Wines' long position.| Martin Marietta vs. Europa Metals | Martin Marietta vs. CNH Industrial NV | Martin Marietta vs. Westlake Chemical Corp | Martin Marietta vs. Inspiration Healthcare Group |
| Virgin Wines vs. iShares Physical Silver | Virgin Wines vs. Silver Bullet Data | Virgin Wines vs. Broadcom | Virgin Wines vs. Hochschild Mining plc |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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