Correlation Between Lendlease and Martin Marietta
Can any of the company-specific risk be diversified away by investing in both Lendlease 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 Lendlease and Martin Marietta into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lendlease Group and Martin Marietta Materials, you can compare the effects of market volatilities on Lendlease 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 Lendlease with a short position of Martin Marietta. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lendlease and Martin Marietta.
Diversification Opportunities for Lendlease and Martin Marietta
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Lendlease and Martin is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Lendlease Group 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 Lendlease 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 Lendlease Group 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 Lendlease i.e., Lendlease and Martin Marietta go up and down completely randomly.
Pair Corralation between Lendlease and Martin Marietta
Assuming the 90 days trading horizon Lendlease Group is expected to under-perform the Martin Marietta. But the stock apears to be less risky and, when comparing its historical volatility, Lendlease Group is 1.25 times less risky than Martin Marietta. The stock trades about -0.01 of its potential returns per unit of risk. The Martin Marietta Materials is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 51,040 in Martin Marietta Materials on October 26, 2024 and sell it today you would earn a total of 1,580 from holding Martin Marietta Materials or generate 3.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lendlease Group vs. Martin Marietta Materials
Performance |
| Timeline |
| Lendlease Group |
| Martin Marietta Materials |
Lendlease and Martin Marietta Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lendlease and Martin Marietta
The main advantage of trading using opposite Lendlease and Martin Marietta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lendlease 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.| Lendlease vs. VIENNA INSURANCE GR | Lendlease vs. Sims Metal Management | Lendlease vs. Corporate Travel Management | Lendlease vs. United Insurance Holdings |
| Martin Marietta vs. Apple Inc | Martin Marietta vs. Apple Inc | Martin Marietta vs. Apple Inc | Martin Marietta vs. Apple Inc |
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.
Other Complementary Tools
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Stocks Directory Find actively traded stocks across global markets | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |