Correlation Between Martin Marietta and Halliburton
Can any of the company-specific risk be diversified away by investing in both Martin Marietta and Halliburton 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 Halliburton 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 Halliburton, you can compare the effects of market volatilities on Martin Marietta and Halliburton 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 Halliburton. Check out your portfolio center. Please also check ongoing floating volatility patterns of Martin Marietta and Halliburton.
Diversification Opportunities for Martin Marietta and Halliburton
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Martin and Halliburton is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Martin Marietta Materials and Halliburton in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Halliburton 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 Halliburton. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Halliburton has no effect on the direction of Martin Marietta i.e., Martin Marietta and Halliburton go up and down completely randomly.
Pair Corralation between Martin Marietta and Halliburton
Assuming the 90 days trading horizon Martin Marietta Materials is expected to under-perform the Halliburton. But the stock apears to be less risky and, when comparing its historical volatility, Martin Marietta Materials is 2.15 times less risky than Halliburton. The stock trades about -0.29 of its potential returns per unit of risk. The Halliburton is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest 63,000 in Halliburton on September 15, 2024 and sell it today you would lose (6,011) from holding Halliburton or give up 9.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Martin Marietta Materials vs. Halliburton
Performance |
| Timeline |
| Martin Marietta Materials |
| Halliburton |
Martin Marietta and Halliburton Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Martin Marietta and Halliburton
The main advantage of trading using opposite Martin Marietta and Halliburton positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Martin Marietta position performs unexpectedly, Halliburton 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 Halliburton will offset losses from the drop in Halliburton's long position.| Martin Marietta vs. Grupo Mxico SAB | Martin Marietta vs. Alfa SAB de | Martin Marietta vs. Grupo Financiero Banorte | Martin Marietta vs. Fomento Econmico Mexicano |
| Halliburton vs. DXC Technology | Halliburton vs. First Majestic Silver | Halliburton vs. Martin Marietta Materials | Halliburton vs. FibraHotel |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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