Correlation Between Martin Marietta and Walmart
Can any of the company-specific risk be diversified away by investing in both Martin Marietta and Walmart 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 Walmart 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 Walmart, you can compare the effects of market volatilities on Martin Marietta and Walmart 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 Walmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Martin Marietta and Walmart.
Diversification Opportunities for Martin Marietta and Walmart
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Martin and Walmart is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Martin Marietta Materials and Walmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walmart 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 Walmart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walmart has no effect on the direction of Martin Marietta i.e., Martin Marietta and Walmart go up and down completely randomly.
Pair Corralation between Martin Marietta and Walmart
Assuming the 90 days trading horizon Martin Marietta is expected to generate 4.67 times less return on investment than Walmart. But when comparing it to its historical volatility, Martin Marietta Materials is 1.22 times less risky than Walmart. It trades about 0.1 of its potential returns per unit of risk. Walmart is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest 167,200 in Walmart on September 3, 2024 and sell it today you would earn a total of 22,100 from holding Walmart or generate 13.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Martin Marietta Materials vs. Walmart
Performance |
| Timeline |
| Martin Marietta Materials |
| Walmart |
Martin Marietta and Walmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Martin Marietta and Walmart
The main advantage of trading using opposite Martin Marietta and Walmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Martin Marietta position performs unexpectedly, Walmart 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 Walmart will offset losses from the drop in Walmart's long position.| Martin Marietta vs. TopBuild Corp | Martin Marietta vs. CEMEX SAB de | Martin Marietta vs. Grupo Lamosa SAB | Martin Marietta vs. Internacional de Cermica |
| Walmart vs. Taiwan Semiconductor Manufacturing | Walmart vs. United Airlines Holdings | Walmart vs. Deutsche Bank Aktiengesellschaft | Walmart vs. Ross Stores |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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