Correlation Between Martin Marietta and First Solar
Can any of the company-specific risk be diversified away by investing in both Martin Marietta and First Solar 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 First Solar 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 First Solar, you can compare the effects of market volatilities on Martin Marietta and First Solar 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 First Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Martin Marietta and First Solar.
Diversification Opportunities for Martin Marietta and First Solar
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Martin and First is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Martin Marietta Materials and First Solar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Solar 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 First Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Solar has no effect on the direction of Martin Marietta i.e., Martin Marietta and First Solar go up and down completely randomly.
Pair Corralation between Martin Marietta and First Solar
Assuming the 90 days trading horizon Martin Marietta Materials is expected to generate 0.48 times more return on investment than First Solar. However, Martin Marietta Materials is 2.08 times less risky than First Solar. It trades about 0.2 of its potential returns per unit of risk. First Solar is currently generating about -0.23 per unit of risk. If you would invest 1,044,553 in Martin Marietta Materials on November 8, 2024 and sell it today you would earn a total of 56,331 from holding Martin Marietta Materials or generate 5.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Martin Marietta Materials vs. First Solar
Performance |
| Timeline |
| Martin Marietta Materials |
| First Solar |
Martin Marietta and First Solar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Martin Marietta and First Solar
The main advantage of trading using opposite Martin Marietta and First Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Martin Marietta position performs unexpectedly, First Solar 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 First Solar will offset losses from the drop in First Solar's long position.| Martin Marietta vs. Micron Technology | Martin Marietta vs. Cognizant Technology Solutions | Martin Marietta vs. Steel Dynamics | Martin Marietta vs. Delta Air Lines |
| First Solar vs. Applied Materials | First Solar vs. Verizon Communications | First Solar vs. CVS Health | First Solar vs. The Bank of |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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