Correlation Between BJs Wholesale and Martin Marietta
Can any of the company-specific risk be diversified away by investing in both BJs Wholesale 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 BJs Wholesale and Martin Marietta into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BJs Wholesale Club and Martin Marietta Materials, you can compare the effects of market volatilities on BJs Wholesale 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 BJs Wholesale with a short position of Martin Marietta. Check out your portfolio center. Please also check ongoing floating volatility patterns of BJs Wholesale and Martin Marietta.
Diversification Opportunities for BJs Wholesale and Martin Marietta
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between BJs and Martin is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding BJs Wholesale Club 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 BJs Wholesale 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 BJs Wholesale Club 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 BJs Wholesale i.e., BJs Wholesale and Martin Marietta go up and down completely randomly.
Pair Corralation between BJs Wholesale and Martin Marietta
Assuming the 90 days horizon BJs Wholesale is expected to generate 1.49 times less return on investment than Martin Marietta. In addition to that, BJs Wholesale is 1.1 times more volatile than Martin Marietta Materials. It trades about 0.05 of its total potential returns per unit of risk. Martin Marietta Materials is currently generating about 0.07 per unit of volatility. If you would invest 33,630 in Martin Marietta Materials on September 3, 2024 and sell it today you would earn a total of 22,570 from holding Martin Marietta Materials or generate 67.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
BJs Wholesale Club vs. Martin Marietta Materials
Performance |
| Timeline |
| BJs Wholesale Club |
| Martin Marietta Materials |
BJs Wholesale and Martin Marietta Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BJs Wholesale and Martin Marietta
The main advantage of trading using opposite BJs Wholesale and Martin Marietta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Wholesale 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.| BJs Wholesale vs. Walmart | BJs Wholesale vs. Superior Plus Corp | BJs Wholesale vs. NMI Holdings | BJs Wholesale vs. Origin Agritech |
| Martin Marietta vs. SBI Insurance Group | Martin Marietta vs. Ping An Insurance | Martin Marietta vs. ScanSource | Martin Marietta vs. Reinsurance Group of |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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