Correlation Between Martin Marietta and BII Railway
Can any of the company-specific risk be diversified away by investing in both Martin Marietta and BII Railway 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 BII Railway 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 BII Railway Transportation, you can compare the effects of market volatilities on Martin Marietta and BII Railway 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 BII Railway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Martin Marietta and BII Railway.
Diversification Opportunities for Martin Marietta and BII Railway
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Martin and BII is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Martin Marietta Materials and BII Railway Transportation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BII Railway Transpor 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 BII Railway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BII Railway Transpor has no effect on the direction of Martin Marietta i.e., Martin Marietta and BII Railway go up and down completely randomly.
Pair Corralation between Martin Marietta and BII Railway
Assuming the 90 days horizon Martin Marietta Materials is expected to under-perform the BII Railway. But the stock apears to be less risky and, when comparing its historical volatility, Martin Marietta Materials is 2.49 times less risky than BII Railway. The stock trades about -0.43 of its potential returns per unit of risk. The BII Railway Transportation is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2.65 in BII Railway Transportation on October 14, 2024 and sell it today you would earn a total of 0.05 from holding BII Railway Transportation or generate 1.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Martin Marietta Materials vs. BII Railway Transportation
Performance |
| Timeline |
| Martin Marietta Materials |
| BII Railway Transpor |
Martin Marietta and BII Railway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Martin Marietta and BII Railway
The main advantage of trading using opposite Martin Marietta and BII Railway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Martin Marietta position performs unexpectedly, BII Railway 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 BII Railway will offset losses from the drop in BII Railway's long position.| Martin Marietta vs. BII Railway Transportation | Martin Marietta vs. Transport International Holdings | Martin Marietta vs. Columbia Sportswear | Martin Marietta vs. USWE SPORTS AB |
| BII Railway vs. American Eagle Outfitters | BII Railway vs. Waste Management | BII Railway vs. LANDSEA GREEN MANAGEMENT | BII Railway vs. COPLAND ROAD CAPITAL |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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