Correlation Between AM EAGLE and Martin Marietta
Can any of the company-specific risk be diversified away by investing in both AM EAGLE 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 AM EAGLE and Martin Marietta into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AM EAGLE OUTFITTERS and Martin Marietta Materials, you can compare the effects of market volatilities on AM EAGLE 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 AM EAGLE with a short position of Martin Marietta. Check out your portfolio center. Please also check ongoing floating volatility patterns of AM EAGLE and Martin Marietta.
Diversification Opportunities for AM EAGLE and Martin Marietta
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between AFG and Martin is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding AM EAGLE OUTFITTERS 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 AM EAGLE 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 AM EAGLE OUTFITTERS 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 AM EAGLE i.e., AM EAGLE and Martin Marietta go up and down completely randomly.
Pair Corralation between AM EAGLE and Martin Marietta
Assuming the 90 days trading horizon AM EAGLE OUTFITTERS is expected to generate 3.63 times more return on investment than Martin Marietta. However, AM EAGLE is 3.63 times more volatile than Martin Marietta Materials. It trades about 0.01 of its potential returns per unit of risk. Martin Marietta Materials is currently generating about -0.28 per unit of risk. If you would invest 1,680 in AM EAGLE OUTFITTERS on September 13, 2024 and sell it today you would lose (10.00) from holding AM EAGLE OUTFITTERS or give up 0.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AM EAGLE OUTFITTERS vs. Martin Marietta Materials
Performance |
| Timeline |
| AM EAGLE OUTFITTERS |
| Martin Marietta Materials |
AM EAGLE and Martin Marietta Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AM EAGLE and Martin Marietta
The main advantage of trading using opposite AM EAGLE and Martin Marietta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AM EAGLE 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.The idea behind AM EAGLE OUTFITTERS and Martin Marietta Materials pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Martin Marietta vs. Apple Inc | Martin Marietta vs. Apple Inc | Martin Marietta vs. Apple Inc | Martin Marietta vs. Apple Inc |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
Other Complementary Tools
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios |