Correlation Between European Metals and Martin Marietta
Can any of the company-specific risk be diversified away by investing in both European Metals 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 European Metals and Martin Marietta into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between European Metals Holdings and Martin Marietta Materials, you can compare the effects of market volatilities on European Metals 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 European Metals with a short position of Martin Marietta. Check out your portfolio center. Please also check ongoing floating volatility patterns of European Metals and Martin Marietta.
Diversification Opportunities for European Metals and Martin Marietta
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between European and Martin is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding European Metals Holdings 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 European Metals 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 European Metals Holdings 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 European Metals i.e., European Metals and Martin Marietta go up and down completely randomly.
Pair Corralation between European Metals and Martin Marietta
Assuming the 90 days trading horizon European Metals Holdings is expected to under-perform the Martin Marietta. In addition to that, European Metals is 1.05 times more volatile than Martin Marietta Materials. It trades about -0.36 of its total potential returns per unit of risk. Martin Marietta Materials is currently generating about 0.1 per unit of volatility. If you would invest 57,605 in Martin Marietta Materials on August 29, 2024 and sell it today you would earn a total of 2,362 from holding Martin Marietta Materials or generate 4.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
European Metals Holdings vs. Martin Marietta Materials
Performance |
| Timeline |
| European Metals Holdings |
| Martin Marietta Materials |
European Metals and Martin Marietta Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with European Metals and Martin Marietta
The main advantage of trading using opposite European Metals and Martin Marietta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if European Metals 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.| European Metals vs. Givaudan SA | European Metals vs. Antofagasta PLC | European Metals vs. Centamin PLC | European Metals vs. Atalaya Mining |
| Martin Marietta vs. Samsung Electronics Co | Martin Marietta vs. Samsung Electronics Co | Martin Marietta vs. Hyundai Motor | Martin Marietta vs. Toyota Motor Corp |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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