Correlation Between Freeport McMoRan and Martin Marietta
Can any of the company-specific risk be diversified away by investing in both Freeport McMoRan 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 Freeport McMoRan and Martin Marietta into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Freeport McMoRan and Martin Marietta Materials, you can compare the effects of market volatilities on Freeport McMoRan 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 Freeport McMoRan with a short position of Martin Marietta. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freeport McMoRan and Martin Marietta.
Diversification Opportunities for Freeport McMoRan and Martin Marietta
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Freeport and Martin is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Freeport McMoRan 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 Freeport McMoRan 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 Freeport McMoRan 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 Freeport McMoRan i.e., Freeport McMoRan and Martin Marietta go up and down completely randomly.
Pair Corralation between Freeport McMoRan and Martin Marietta
Assuming the 90 days trading horizon Freeport McMoRan is expected to generate 1.78 times less return on investment than Martin Marietta. In addition to that, Freeport McMoRan is 1.65 times more volatile than Martin Marietta Materials. It trades about 0.02 of its total potential returns per unit of risk. Martin Marietta Materials is currently generating about 0.07 per unit of volatility. If you would invest 609,681 in Martin Marietta Materials on December 4, 2024 and sell it today you would earn a total of 370,490 from holding Martin Marietta Materials or generate 60.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Freeport McMoRan vs. Martin Marietta Materials
Performance |
| Timeline |
| Freeport McMoRan |
| Martin Marietta Materials |
Freeport McMoRan and Martin Marietta Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Freeport McMoRan and Martin Marietta
The main advantage of trading using opposite Freeport McMoRan and Martin Marietta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freeport McMoRan 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.| Freeport McMoRan vs. Ross Stores | Freeport McMoRan vs. Micron Technology | Freeport McMoRan vs. The Bank of | Freeport McMoRan vs. Genworth Financial |
| Martin Marietta vs. DXC Technology | Martin Marietta vs. Verizon Communications | Martin Marietta vs. GMxico Transportes SAB | Martin Marietta vs. Ross Stores |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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