Correlation Between Martin Marietta and HSBC Holdings
Can any of the company-specific risk be diversified away by investing in both Martin Marietta and HSBC Holdings 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 HSBC Holdings 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 HSBC Holdings plc, you can compare the effects of market volatilities on Martin Marietta and HSBC Holdings 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 HSBC Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Martin Marietta and HSBC Holdings.
Diversification Opportunities for Martin Marietta and HSBC Holdings
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Martin and HSBC is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Martin Marietta Materials and HSBC Holdings plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HSBC Holdings plc 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 HSBC Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HSBC Holdings plc has no effect on the direction of Martin Marietta i.e., Martin Marietta and HSBC Holdings go up and down completely randomly.
Pair Corralation between Martin Marietta and HSBC Holdings
Assuming the 90 days trading horizon Martin Marietta is expected to generate 2.59 times less return on investment than HSBC Holdings. But when comparing it to its historical volatility, Martin Marietta Materials is 1.18 times less risky than HSBC Holdings. It trades about 0.05 of its potential returns per unit of risk. HSBC Holdings plc is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 76,171 in HSBC Holdings plc on November 2, 2024 and sell it today you would earn a total of 17,329 from holding HSBC Holdings plc or generate 22.75% 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. HSBC Holdings plc
Performance |
| Timeline |
| Martin Marietta Materials |
| HSBC Holdings plc |
Martin Marietta and HSBC Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Martin Marietta and HSBC Holdings
The main advantage of trading using opposite Martin Marietta and HSBC Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Martin Marietta position performs unexpectedly, HSBC Holdings 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 HSBC Holdings will offset losses from the drop in HSBC Holdings' long position.| Martin Marietta vs. First Republic Bank | Martin Marietta vs. Genworth Financial | Martin Marietta vs. Ameriprise Financial | Martin Marietta vs. Monster Beverage Corp |
| HSBC Holdings vs. Capital One Financial | HSBC Holdings vs. Southern Copper | HSBC Holdings vs. Prudential Financial | HSBC Holdings vs. Lloyds Banking Group |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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