Correlation Between Martin Marietta and United States
Can any of the company-specific risk be diversified away by investing in both Martin Marietta and United States 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 United States 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 United States Steel, you can compare the effects of market volatilities on Martin Marietta and United States 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 United States. Check out your portfolio center. Please also check ongoing floating volatility patterns of Martin Marietta and United States.
Diversification Opportunities for Martin Marietta and United States
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Martin and United is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Martin Marietta Materials and United States Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United States Steel 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 United States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United States Steel has no effect on the direction of Martin Marietta i.e., Martin Marietta and United States go up and down completely randomly.
Pair Corralation between Martin Marietta and United States
Assuming the 90 days trading horizon Martin Marietta Materials is expected to generate 0.51 times more return on investment than United States. However, Martin Marietta Materials is 1.98 times less risky than United States. It trades about 0.18 of its potential returns per unit of risk. United States Steel is currently generating about 0.08 per unit of risk. If you would invest 1,006,416 in Martin Marietta Materials on August 28, 2024 and sell it today you would earn a total of 216,414 from holding Martin Marietta Materials or generate 21.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Martin Marietta Materials vs. United States Steel
Performance |
| Timeline |
| Martin Marietta Materials |
| United States Steel |
Martin Marietta and United States Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Martin Marietta and United States
The main advantage of trading using opposite Martin Marietta and United States positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Martin Marietta position performs unexpectedly, United States 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 United States will offset losses from the drop in United States' long position.| Martin Marietta vs. Grupo Cementos de | Martin Marietta vs. The Select Sector | Martin Marietta vs. Promotora y Operadora | Martin Marietta vs. iShares Global Timber |
| United States vs. The Select Sector | United States vs. Promotora y Operadora | United States vs. iShares Global Timber | United States vs. SPDR Series Trust |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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