Correlation Between Martin Marietta and Applied Materials
Can any of the company-specific risk be diversified away by investing in both Martin Marietta and Applied Materials 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 Applied Materials 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 Applied Materials, you can compare the effects of market volatilities on Martin Marietta and Applied Materials 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 Applied Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Martin Marietta and Applied Materials.
Diversification Opportunities for Martin Marietta and Applied Materials
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Martin and Applied is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Martin Marietta Materials and Applied Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Materials 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 Applied Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied Materials has no effect on the direction of Martin Marietta i.e., Martin Marietta and Applied Materials go up and down completely randomly.
Pair Corralation between Martin Marietta and Applied Materials
Assuming the 90 days trading horizon Martin Marietta Materials is expected to generate 0.45 times more return on investment than Applied Materials. However, Martin Marietta Materials is 2.2 times less risky than Applied Materials. It trades about 0.01 of its potential returns per unit of risk. Applied Materials is currently generating about -0.09 per unit of risk. If you would invest 1,212,089 in Martin Marietta Materials on August 31, 2024 and sell it today you would earn a total of 411.00 from holding Martin Marietta Materials or generate 0.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Martin Marietta Materials vs. Applied Materials
Performance |
| Timeline |
| Martin Marietta Materials |
| Applied Materials |
Martin Marietta and Applied Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Martin Marietta and Applied Materials
The main advantage of trading using opposite Martin Marietta and Applied Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Martin Marietta position performs unexpectedly, Applied Materials 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 Applied Materials will offset losses from the drop in Applied Materials' long position.| Martin Marietta vs. TopBuild Corp | Martin Marietta vs. CEMEX SAB de | Martin Marietta vs. Grupo Cementos de | Martin Marietta vs. Grupo Lamosa SAB |
| Applied Materials vs. Micron Technology | Applied Materials vs. First Republic Bank | Applied Materials vs. Grupo Sports World | Applied Materials vs. Grupo Carso 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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