Correlation Between Martin Marietta and Lafargeholcim
Can any of the company-specific risk be diversified away by investing in both Martin Marietta and Lafargeholcim 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 Lafargeholcim 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 Lafargeholcim Ltd ADR, you can compare the effects of market volatilities on Martin Marietta and Lafargeholcim 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 Lafargeholcim. Check out your portfolio center. Please also check ongoing floating volatility patterns of Martin Marietta and Lafargeholcim.
Diversification Opportunities for Martin Marietta and Lafargeholcim
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Martin and Lafargeholcim is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Martin Marietta Materials and Lafargeholcim Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lafargeholcim ADR 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 Lafargeholcim. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lafargeholcim ADR has no effect on the direction of Martin Marietta i.e., Martin Marietta and Lafargeholcim go up and down completely randomly.
Pair Corralation between Martin Marietta and Lafargeholcim
Considering the 90-day investment horizon Martin Marietta is expected to generate 2.26 times less return on investment than Lafargeholcim. In addition to that, Martin Marietta is 1.21 times more volatile than Lafargeholcim Ltd ADR. It trades about 0.04 of its total potential returns per unit of risk. Lafargeholcim Ltd ADR is currently generating about 0.1 per unit of volatility. If you would invest 1,505 in Lafargeholcim Ltd ADR on September 14, 2024 and sell it today you would earn a total of 511.00 from holding Lafargeholcim Ltd ADR or generate 33.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Martin Marietta Materials vs. Lafargeholcim Ltd ADR
Performance |
| Timeline |
| Martin Marietta Materials |
| Lafargeholcim ADR |
Martin Marietta and Lafargeholcim Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Martin Marietta and Lafargeholcim
The main advantage of trading using opposite Martin Marietta and Lafargeholcim positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Martin Marietta position performs unexpectedly, Lafargeholcim 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 Lafargeholcim will offset losses from the drop in Lafargeholcim's long position.| Martin Marietta vs. CRH PLC ADR | Martin Marietta vs. Eagle Materials | Martin Marietta vs. Summit Materials | Martin Marietta vs. United States Lime |
| Lafargeholcim vs. CRH PLC ADR | Lafargeholcim vs. Holcim | Lafargeholcim vs. Vulcan Materials | Lafargeholcim vs. Martin Marietta Materials |
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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