Correlation Between Basanite and Martin Marietta
Can any of the company-specific risk be diversified away by investing in both Basanite 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 Basanite and Martin Marietta into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Basanite and Martin Marietta Materials, you can compare the effects of market volatilities on Basanite 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 Basanite with a short position of Martin Marietta. Check out your portfolio center. Please also check ongoing floating volatility patterns of Basanite and Martin Marietta.
Diversification Opportunities for Basanite and Martin Marietta
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Basanite and Martin is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Basanite 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 Basanite 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 Basanite 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 Basanite i.e., Basanite and Martin Marietta go up and down completely randomly.
Pair Corralation between Basanite and Martin Marietta
Given the investment horizon of 90 days Basanite is expected to generate 8.92 times more return on investment than Martin Marietta. However, Basanite is 8.92 times more volatile than Martin Marietta Materials. It trades about 0.02 of its potential returns per unit of risk. Martin Marietta Materials is currently generating about -0.03 per unit of risk. If you would invest 5.90 in Basanite on August 31, 2024 and sell it today you would lose (0.90) from holding Basanite or give up 15.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Basanite vs. Martin Marietta Materials
Performance |
| Timeline |
| Basanite |
| Martin Marietta Materials |
Basanite and Martin Marietta Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Basanite and Martin Marietta
The main advantage of trading using opposite Basanite and Martin Marietta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Basanite 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.| Basanite vs. Xinyi Glass Holdings | Basanite vs. CEMATRIX | Basanite vs. Anhui Conch Cement | Basanite vs. CEMEX SAB de |
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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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