Correlation Between Universal Display and Martin Marietta
Can any of the company-specific risk be diversified away by investing in both Universal Display and Martin Marietta 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 Universal Display and Martin Marietta into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal Display Corp and Martin Marietta Materials, you can compare the effects of market volatilities on Universal Display and Martin Marietta 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 Universal Display with a short position of Martin Marietta. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Display and Martin Marietta.
Diversification Opportunities for Universal Display and Martin Marietta
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Universal and Martin is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Universal Display Corp and Martin Marietta Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Martin Marietta Materials and Universal Display 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 Universal Display Corp are associated (or correlated) with Martin Marietta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Martin Marietta Materials has no effect on the direction of Universal Display i.e., Universal Display and Martin Marietta go up and down completely randomly.
Pair Corralation between Universal Display and Martin Marietta
Assuming the 90 days trading horizon Universal Display Corp is expected to under-perform the Martin Marietta. In addition to that, Universal Display is 1.71 times more volatile than Martin Marietta Materials. It trades about -0.32 of its total potential returns per unit of risk. Martin Marietta Materials is currently generating about -0.05 per unit of volatility. If you would invest 60,947 in Martin Marietta Materials on August 31, 2024 and sell it today you would lose (1,431) from holding Martin Marietta Materials or give up 2.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Universal Display Corp vs. Martin Marietta Materials
Performance |
| Timeline |
| Universal Display Corp |
| Martin Marietta Materials |
Universal Display and Martin Marietta Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Display and Martin Marietta
The main advantage of trading using opposite Universal Display and Martin Marietta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Display position performs unexpectedly, Martin Marietta 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 Martin Marietta will offset losses from the drop in Martin Marietta's long position.| Universal Display vs. Neometals | Universal Display vs. Coor Service Management | Universal Display vs. Aeorema Communications Plc | Universal Display vs. JLEN Environmental Assets |
| Martin Marietta vs. Neometals | Martin Marietta vs. Coor Service Management | Martin Marietta vs. Aeorema Communications Plc | Martin Marietta vs. JLEN Environmental Assets |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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