Correlation Between Food Life and Martin Marietta
Can any of the company-specific risk be diversified away by investing in both Food Life 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 Food Life and Martin Marietta into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Food Life Companies and Martin Marietta Materials, you can compare the effects of market volatilities on Food Life 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 Food Life with a short position of Martin Marietta. Check out your portfolio center. Please also check ongoing floating volatility patterns of Food Life and Martin Marietta.
Diversification Opportunities for Food Life and Martin Marietta
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Food and Martin is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Food Life Companies 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 Food Life 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 Food Life Companies 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 Food Life i.e., Food Life and Martin Marietta go up and down completely randomly.
Pair Corralation between Food Life and Martin Marietta
Assuming the 90 days horizon Food Life is expected to generate 1.82 times less return on investment than Martin Marietta. In addition to that, Food Life is 1.66 times more volatile than Martin Marietta Materials. It trades about 0.02 of its total potential returns per unit of risk. Martin Marietta Materials is currently generating about 0.06 per unit of volatility. If you would invest 30,995 in Martin Marietta Materials on December 4, 2024 and sell it today you would earn a total of 13,645 from holding Martin Marietta Materials or generate 44.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Food Life Companies vs. Martin Marietta Materials
Performance |
| Timeline |
| Food Life Companies |
| Martin Marietta Materials |
Food Life and Martin Marietta Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Food Life and Martin Marietta
The main advantage of trading using opposite Food Life and Martin Marietta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Food Life 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.| Food Life vs. De Grey Mining | Food Life vs. Aya Gold Silver | Food Life vs. Eurasia Mining Plc | Food Life vs. Strategic Education |
| Martin Marietta vs. OAKTRSPECLENDNEW | Martin Marietta vs. JSC Halyk bank | Martin Marietta vs. Virtu Financial | Martin Marietta vs. GRUPO CARSO A1 |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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