Correlation Between Martin Marietta and International Business
Can any of the company-specific risk be diversified away by investing in both Martin Marietta and International Business 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 International Business 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 International Business Machines, you can compare the effects of market volatilities on Martin Marietta and International Business 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 International Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of Martin Marietta and International Business.
Diversification Opportunities for Martin Marietta and International Business
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Martin and International is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Martin Marietta Materials and International Business Machine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Business 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 International Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Business has no effect on the direction of Martin Marietta i.e., Martin Marietta and International Business go up and down completely randomly.
Pair Corralation between Martin Marietta and International Business
Assuming the 90 days trading horizon Martin Marietta is expected to generate 1.61 times less return on investment than International Business. In addition to that, Martin Marietta is 1.02 times more volatile than International Business Machines. It trades about 0.09 of its total potential returns per unit of risk. International Business Machines is currently generating about 0.15 per unit of volatility. If you would invest 255,456 in International Business Machines on September 14, 2024 and sell it today you would earn a total of 214,544 from holding International Business Machines or generate 83.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.63% |
| Values | Daily Returns |
Martin Marietta Materials vs. International Business Machine
Performance |
| Timeline |
| Martin Marietta Materials |
| International Business |
Martin Marietta and International Business Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Martin Marietta and International Business
The main advantage of trading using opposite Martin Marietta and International Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Martin Marietta position performs unexpectedly, International Business 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 International Business will offset losses from the drop in International Business' 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 |
| International Business vs. Martin Marietta Materials | International Business vs. CVS Health | International Business vs. Deutsche Bank Aktiengesellschaft | International Business vs. McEwen Mining |
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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