Correlation Between Martin Marietta and JB Hunt
Can any of the company-specific risk be diversified away by investing in both Martin Marietta and JB Hunt 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 Martin Marietta and JB Hunt into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Martin Marietta Materials, and JB Hunt Transport, you can compare the effects of market volatilities on Martin Marietta and JB Hunt 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 Martin Marietta with a short position of JB Hunt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Martin Marietta and JB Hunt.
Diversification Opportunities for Martin Marietta and JB Hunt
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Martin and J1BH34 is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Martin Marietta Materials, and JB Hunt Transport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JB Hunt Transport and Martin Marietta 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 Martin Marietta Materials, are associated (or correlated) with JB Hunt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JB Hunt Transport has no effect on the direction of Martin Marietta i.e., Martin Marietta and JB Hunt go up and down completely randomly.
Pair Corralation between Martin Marietta and JB Hunt
Assuming the 90 days trading horizon Martin Marietta Materials, is expected to generate 1.49 times more return on investment than JB Hunt. However, Martin Marietta is 1.49 times more volatile than JB Hunt Transport. It trades about 0.06 of its potential returns per unit of risk. JB Hunt Transport is currently generating about 0.01 per unit of risk. If you would invest 35,752 in Martin Marietta Materials, on October 11, 2024 and sell it today you would earn a total of 20,498 from holding Martin Marietta Materials, or generate 57.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Martin Marietta Materials, vs. JB Hunt Transport
Performance |
| Timeline |
| Martin Marietta Mate |
| JB Hunt Transport |
Martin Marietta and JB Hunt Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Martin Marietta and JB Hunt
The main advantage of trading using opposite Martin Marietta and JB Hunt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Martin Marietta position performs unexpectedly, JB Hunt 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 JB Hunt will offset losses from the drop in JB Hunt's long position.| Martin Marietta vs. Taiwan Semiconductor Manufacturing | Martin Marietta vs. Apple Inc | Martin Marietta vs. Alibaba Group Holding | Martin Marietta vs. Banco Santander Chile |
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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