Correlation Between Martin Marietta and Alibaba Group
Can any of the company-specific risk be diversified away by investing in both Martin Marietta and Alibaba Group 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 Alibaba Group 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 Alibaba Group Holding, you can compare the effects of market volatilities on Martin Marietta and Alibaba Group 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 Alibaba Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Martin Marietta and Alibaba Group.
Diversification Opportunities for Martin Marietta and Alibaba Group
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Martin and Alibaba is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Martin Marietta Materials and Alibaba Group Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alibaba Group Holding 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 Alibaba Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alibaba Group Holding has no effect on the direction of Martin Marietta i.e., Martin Marietta and Alibaba Group go up and down completely randomly.
Pair Corralation between Martin Marietta and Alibaba Group
Assuming the 90 days trading horizon Martin Marietta Materials is expected to generate 0.7 times more return on investment than Alibaba Group. However, Martin Marietta Materials is 1.43 times less risky than Alibaba Group. It trades about 0.02 of its potential returns per unit of risk. Alibaba Group Holding is currently generating about -0.23 per unit of risk. If you would invest 1,212,089 in Martin Marietta Materials on September 1, 2024 and sell it today you would earn a total of 3,971 from holding Martin Marietta Materials or generate 0.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Martin Marietta Materials vs. Alibaba Group Holding
Performance |
| Timeline |
| Martin Marietta Materials |
| Alibaba Group Holding |
Martin Marietta and Alibaba Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Martin Marietta and Alibaba Group
The main advantage of trading using opposite Martin Marietta and Alibaba Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Martin Marietta position performs unexpectedly, Alibaba Group 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 Alibaba Group will offset losses from the drop in Alibaba Group's long position.| Martin Marietta vs. TopBuild Corp | Martin Marietta vs. Grupo Cementos de | Martin Marietta vs. Grupo Lamosa SAB |
| Alibaba Group vs. GMxico Transportes SAB | Alibaba Group vs. DXC Technology | Alibaba Group vs. Deutsche Bank Aktiengesellschaft | Alibaba Group 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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