Correlation Between Martin Marietta and Roche Holding
Can any of the company-specific risk be diversified away by investing in both Martin Marietta and Roche Holding 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 Roche Holding 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 Roche Holding AG, you can compare the effects of market volatilities on Martin Marietta and Roche Holding 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 Roche Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Martin Marietta and Roche Holding.
Diversification Opportunities for Martin Marietta and Roche Holding
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Martin and Roche is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Martin Marietta Materials and Roche Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roche Holding AG 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 Roche Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roche Holding AG has no effect on the direction of Martin Marietta i.e., Martin Marietta and Roche Holding go up and down completely randomly.
Pair Corralation between Martin Marietta and Roche Holding
Assuming the 90 days trading horizon Martin Marietta Materials is expected to generate 0.79 times more return on investment than Roche Holding. However, Martin Marietta Materials is 1.26 times less risky than Roche Holding. It trades about 0.09 of its potential returns per unit of risk. Roche Holding AG is currently generating about 0.07 per unit of risk. If you would invest 773,522 in Martin Marietta Materials on September 14, 2024 and sell it today you would earn a total of 341,335 from holding Martin Marietta Materials or generate 44.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.63% |
| Values | Daily Returns |
Martin Marietta Materials vs. Roche Holding AG
Performance |
| Timeline |
| Martin Marietta Materials |
| Roche Holding AG |
Martin Marietta and Roche Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Martin Marietta and Roche Holding
The main advantage of trading using opposite Martin Marietta and Roche Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Martin Marietta position performs unexpectedly, Roche Holding 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 Roche Holding will offset losses from the drop in Roche Holding'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 |
| Roche Holding vs. Verizon Communications | Roche Holding vs. GMxico Transportes SAB | Roche Holding vs. Martin Marietta Materials | Roche Holding vs. Grupo Hotelero Santa |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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