Correlation Between AECOM TECHNOLOGY and Martin Marietta
Can any of the company-specific risk be diversified away by investing in both AECOM TECHNOLOGY 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 AECOM TECHNOLOGY and Martin Marietta into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AECOM TECHNOLOGY and Martin Marietta Materials, you can compare the effects of market volatilities on AECOM TECHNOLOGY 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 AECOM TECHNOLOGY with a short position of Martin Marietta. Check out your portfolio center. Please also check ongoing floating volatility patterns of AECOM TECHNOLOGY and Martin Marietta.
Diversification Opportunities for AECOM TECHNOLOGY and Martin Marietta
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between AECOM and Martin is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding AECOM TECHNOLOGY 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 AECOM TECHNOLOGY 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 AECOM TECHNOLOGY 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 AECOM TECHNOLOGY i.e., AECOM TECHNOLOGY and Martin Marietta go up and down completely randomly.
Pair Corralation between AECOM TECHNOLOGY and Martin Marietta
Assuming the 90 days trading horizon AECOM TECHNOLOGY is expected to generate 1.42 times more return on investment than Martin Marietta. However, AECOM TECHNOLOGY is 1.42 times more volatile than Martin Marietta Materials. It trades about -0.05 of its potential returns per unit of risk. Martin Marietta Materials is currently generating about -0.15 per unit of risk. If you would invest 10,573 in AECOM TECHNOLOGY on November 7, 2024 and sell it today you would lose (573.00) from holding AECOM TECHNOLOGY or give up 5.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AECOM TECHNOLOGY vs. Martin Marietta Materials
Performance |
| Timeline |
| AECOM TECHNOLOGY |
| Martin Marietta Materials |
AECOM TECHNOLOGY and Martin Marietta Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AECOM TECHNOLOGY and Martin Marietta
The main advantage of trading using opposite AECOM TECHNOLOGY and Martin Marietta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AECOM TECHNOLOGY 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.| AECOM TECHNOLOGY vs. China BlueChemical | AECOM TECHNOLOGY vs. SEKISUI CHEMICAL | AECOM TECHNOLOGY vs. EITZEN CHEMICALS | AECOM TECHNOLOGY vs. TRADEGATE |
| Martin Marietta vs. INTER CARS SA | Martin Marietta vs. Grupo Carso SAB | Martin Marietta vs. Casio Computer CoLtd | Martin Marietta vs. Align Technology |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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