Correlation Between Investment and Martin Marietta
Can any of the company-specific risk be diversified away by investing in both Investment 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 Investment and Martin Marietta into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Investment and Martin Marietta Materials, you can compare the effects of market volatilities on Investment 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 Investment with a short position of Martin Marietta. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investment and Martin Marietta.
Diversification Opportunities for Investment and Martin Marietta
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Investment and Martin is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding The Investment 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 Investment 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 The Investment 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 Investment i.e., Investment and Martin Marietta go up and down completely randomly.
Pair Corralation between Investment and Martin Marietta
Assuming the 90 days trading horizon Investment is expected to generate 2.07 times less return on investment than Martin Marietta. But when comparing it to its historical volatility, The Investment is 1.77 times less risky than Martin Marietta. It trades about 0.07 of its potential returns per unit of risk. Martin Marietta Materials is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 34,717 in Martin Marietta Materials on September 3, 2024 and sell it today you would earn a total of 24,732 from holding Martin Marietta Materials or generate 71.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 91.65% |
| Values | Daily Returns |
The Investment vs. Martin Marietta Materials
Performance |
| Timeline |
| Investment |
| Martin Marietta Materials |
Investment and Martin Marietta Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Investment and Martin Marietta
The main advantage of trading using opposite Investment and Martin Marietta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investment 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.| Investment vs. CAP LEASE AVIATION | Investment vs. Infrastrutture Wireless Italiane | Investment vs. UNIQA Insurance Group | Investment vs. Verizon Communications |
| Martin Marietta vs. Catalyst Media Group | Martin Marietta vs. CATLIN GROUP | Martin Marietta vs. RTW Venture Fund | Martin Marietta vs. Secure Property Development |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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