Correlation Between AHOLD DELHAIADR16 and Martin Marietta
Can any of the company-specific risk be diversified away by investing in both AHOLD DELHAIADR16 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 AHOLD DELHAIADR16 and Martin Marietta into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AHOLD DELHAIADR16 EO 25 and Martin Marietta Materials, you can compare the effects of market volatilities on AHOLD DELHAIADR16 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 AHOLD DELHAIADR16 with a short position of Martin Marietta. Check out your portfolio center. Please also check ongoing floating volatility patterns of AHOLD DELHAIADR16 and Martin Marietta.
Diversification Opportunities for AHOLD DELHAIADR16 and Martin Marietta
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between AHOLD and Martin is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding AHOLD DELHAIADR16 EO 25 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 AHOLD DELHAIADR16 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 AHOLD DELHAIADR16 EO 25 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 AHOLD DELHAIADR16 i.e., AHOLD DELHAIADR16 and Martin Marietta go up and down completely randomly.
Pair Corralation between AHOLD DELHAIADR16 and Martin Marietta
Assuming the 90 days trading horizon AHOLD DELHAIADR16 is expected to generate 3.06 times less return on investment than Martin Marietta. But when comparing it to its historical volatility, AHOLD DELHAIADR16 EO 25 is 1.37 times less risky than Martin Marietta. It trades about 0.07 of its potential returns per unit of risk. Martin Marietta Materials is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 46,405 in Martin Marietta Materials on September 12, 2024 and sell it today you would earn a total of 7,115 from holding Martin Marietta Materials or generate 15.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AHOLD DELHAIADR16 EO 25 vs. Martin Marietta Materials
Performance |
| Timeline |
| AHOLD DELHAIADR16 |
| Martin Marietta Materials |
AHOLD DELHAIADR16 and Martin Marietta Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AHOLD DELHAIADR16 and Martin Marietta
The main advantage of trading using opposite AHOLD DELHAIADR16 and Martin Marietta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AHOLD DELHAIADR16 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.| AHOLD DELHAIADR16 vs. Woolworths Group Limited | AHOLD DELHAIADR16 vs. Loblaw Companies Limited | AHOLD DELHAIADR16 vs. Superior Plus Corp | AHOLD DELHAIADR16 vs. SIVERS SEMICONDUCTORS AB |
| 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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