Correlation Between Martin Marietta and Micron Technology
Can any of the company-specific risk be diversified away by investing in both Martin Marietta and Micron Technology 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 Micron Technology 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 Micron Technology, you can compare the effects of market volatilities on Martin Marietta and Micron Technology 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 Micron Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Martin Marietta and Micron Technology.
Diversification Opportunities for Martin Marietta and Micron Technology
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Martin and Micron is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Martin Marietta Materials and Micron Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Micron Technology 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 Micron Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Micron Technology has no effect on the direction of Martin Marietta i.e., Martin Marietta and Micron Technology go up and down completely randomly.
Pair Corralation between Martin Marietta and Micron Technology
Assuming the 90 days trading horizon Martin Marietta Materials is expected to generate 0.59 times more return on investment than Micron Technology. However, Martin Marietta Materials is 1.69 times less risky than Micron Technology. It trades about 0.12 of its potential returns per unit of risk. Micron Technology is currently generating about 0.06 per unit of risk. If you would invest 1,064,940 in Martin Marietta Materials on August 25, 2024 and sell it today you would earn a total of 157,890 from holding Martin Marietta Materials or generate 14.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Martin Marietta Materials vs. Micron Technology
Performance |
| Timeline |
| Martin Marietta Materials |
| Micron Technology |
Martin Marietta and Micron Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Martin Marietta and Micron Technology
The main advantage of trading using opposite Martin Marietta and Micron Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Martin Marietta position performs unexpectedly, Micron Technology 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 Micron Technology will offset losses from the drop in Micron Technology's long position.| Martin Marietta vs. CEMEX SAB de | Martin Marietta vs. Grupo Cementos de | Martin Marietta vs. The Select Sector | Martin Marietta vs. Promotora y Operadora |
| Micron Technology vs. Cognizant Technology Solutions | Micron Technology vs. Martin Marietta Materials | Micron Technology vs. Verizon Communications | Micron Technology 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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