Correlation Between Martin Marietta and Summit Materials
Can any of the company-specific risk be diversified away by investing in both Martin Marietta and Summit Materials 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 Summit Materials 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 Summit Materials, you can compare the effects of market volatilities on Martin Marietta and Summit Materials 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 Summit Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Martin Marietta and Summit Materials.
Diversification Opportunities for Martin Marietta and Summit Materials
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Martin and Summit is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Martin Marietta Materials and Summit Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Materials 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 Summit Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Materials has no effect on the direction of Martin Marietta i.e., Martin Marietta and Summit Materials go up and down completely randomly.
Pair Corralation between Martin Marietta and Summit Materials
Considering the 90-day investment horizon Martin Marietta is expected to generate 4.43 times less return on investment than Summit Materials. But when comparing it to its historical volatility, Martin Marietta Materials is 1.44 times less risky than Summit Materials. It trades about 0.13 of its potential returns per unit of risk. Summit Materials is currently generating about 0.41 of returns per unit of risk over similar time horizon. If you would invest 4,030 in Summit Materials on August 23, 2024 and sell it today you would earn a total of 1,086 from holding Summit Materials or generate 26.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Martin Marietta Materials vs. Summit Materials
Performance |
| Timeline |
| Martin Marietta Materials |
| Summit Materials |
Martin Marietta and Summit Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Martin Marietta and Summit Materials
The main advantage of trading using opposite Martin Marietta and Summit Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Martin Marietta position performs unexpectedly, Summit Materials 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 Summit Materials will offset losses from the drop in Summit Materials' long position.| Martin Marietta vs. CRH PLC ADR | Martin Marietta vs. Eagle Materials | Martin Marietta vs. Summit Materials | Martin Marietta vs. United States Lime |
| Summit Materials vs. Martin Marietta Materials | Summit Materials vs. Vulcan Materials | Summit Materials vs. United States Lime | Summit Materials vs. James Hardie Industries |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities |