Correlation Between Martin Marietta and Amgen
Can any of the company-specific risk be diversified away by investing in both Martin Marietta and Amgen 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 Amgen 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 Amgen Inc, you can compare the effects of market volatilities on Martin Marietta and Amgen 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 Amgen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Martin Marietta and Amgen.
Diversification Opportunities for Martin Marietta and Amgen
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Martin and Amgen is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Martin Marietta Materials and Amgen Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amgen Inc 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 Amgen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amgen Inc has no effect on the direction of Martin Marietta i.e., Martin Marietta and Amgen go up and down completely randomly.
Pair Corralation between Martin Marietta and Amgen
Assuming the 90 days trading horizon Martin Marietta Materials is expected to generate 0.43 times more return on investment than Amgen. However, Martin Marietta Materials is 2.35 times less risky than Amgen. It trades about 0.01 of its potential returns per unit of risk. Amgen Inc is currently generating about -0.11 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. Amgen Inc
Performance |
| Timeline |
| Martin Marietta Materials |
| Amgen Inc |
Martin Marietta and Amgen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Martin Marietta and Amgen
The main advantage of trading using opposite Martin Marietta and Amgen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Martin Marietta position performs unexpectedly, Amgen 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 Amgen will offset losses from the drop in Amgen's 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 |
| Amgen vs. Capital One Financial | Amgen vs. Ameriprise Financial | Amgen vs. KB Home | Amgen vs. Micron Technology |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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