Correlation Between Las Vegas and Martin Marietta
Can any of the company-specific risk be diversified away by investing in both Las Vegas 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 Las Vegas and Martin Marietta into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Las Vegas Sands and Martin Marietta Materials, you can compare the effects of market volatilities on Las Vegas 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 Las Vegas with a short position of Martin Marietta. Check out your portfolio center. Please also check ongoing floating volatility patterns of Las Vegas and Martin Marietta.
Diversification Opportunities for Las Vegas and Martin Marietta
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Las and Martin is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Las Vegas Sands 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 Las Vegas 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 Las Vegas Sands 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 Las Vegas i.e., Las Vegas and Martin Marietta go up and down completely randomly.
Pair Corralation between Las Vegas and Martin Marietta
Assuming the 90 days trading horizon Las Vegas is expected to generate 1.24 times less return on investment than Martin Marietta. In addition to that, Las Vegas is 1.15 times more volatile than Martin Marietta Materials. It trades about 0.08 of its total potential returns per unit of risk. Martin Marietta Materials is currently generating about 0.11 per unit of volatility. If you would invest 791,468 in Martin Marietta Materials on September 2, 2024 and sell it today you would earn a total of 424,592 from holding Martin Marietta Materials or generate 53.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Las Vegas Sands vs. Martin Marietta Materials
Performance |
| Timeline |
| Las Vegas Sands |
| Martin Marietta Materials |
Las Vegas and Martin Marietta Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Las Vegas and Martin Marietta
The main advantage of trading using opposite Las Vegas and Martin Marietta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Las Vegas 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.| Las Vegas vs. FibraHotel | Las Vegas vs. Martin Marietta Materials | Las Vegas vs. Grupo Hotelero Santa | Las Vegas vs. Hoteles City Express |
| Martin Marietta vs. TopBuild Corp | Martin Marietta vs. Grupo Cementos de | Martin Marietta vs. Grupo Lamosa SAB |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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