Correlation Between Capital One and Martin Marietta
Can any of the company-specific risk be diversified away by investing in both Capital One 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 Capital One and Martin Marietta into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capital One Financial and Martin Marietta Materials, you can compare the effects of market volatilities on Capital One 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 Capital One with a short position of Martin Marietta. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital One and Martin Marietta.
Diversification Opportunities for Capital One and Martin Marietta
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Capital and Martin is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Capital One Financial 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 Capital One 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 Capital One Financial 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 Capital One i.e., Capital One and Martin Marietta go up and down completely randomly.
Pair Corralation between Capital One and Martin Marietta
Assuming the 90 days trading horizon Capital One Financial is expected to generate 1.54 times more return on investment than Martin Marietta. However, Capital One is 1.54 times more volatile than Martin Marietta Materials. It trades about 0.08 of its potential returns per unit of risk. Martin Marietta Materials is currently generating about 0.09 per unit of risk. If you would invest 179,475 in Capital One Financial on August 30, 2024 and sell it today you would earn a total of 203,511 from holding Capital One Financial or generate 113.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capital One Financial vs. Martin Marietta Materials
Performance |
| Timeline |
| Capital One Financial |
| Martin Marietta Materials |
Capital One and Martin Marietta Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital One and Martin Marietta
The main advantage of trading using opposite Capital One and Martin Marietta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital One 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.| Capital One vs. Mastercard Incorporated | Capital One vs. Gentera SAB de | Capital One vs. Unifin Financiera S |
| Martin Marietta vs. CEMEX SAB de | Martin Marietta vs. Grupo Cementos de | Martin Marietta vs. Grupo Lamosa SAB |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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