Correlation Between Martin Marietta and Focus Home
Can any of the company-specific risk be diversified away by investing in both Martin Marietta and Focus Home 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 Focus Home 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 Focus Home Interactive, you can compare the effects of market volatilities on Martin Marietta and Focus Home 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 Focus Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of Martin Marietta and Focus Home.
Diversification Opportunities for Martin Marietta and Focus Home
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Martin and Focus is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Martin Marietta Materials and Focus Home Interactive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Focus Home Interactive 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 Focus Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Focus Home Interactive has no effect on the direction of Martin Marietta i.e., Martin Marietta and Focus Home go up and down completely randomly.
Pair Corralation between Martin Marietta and Focus Home
Assuming the 90 days trading horizon Martin Marietta Materials is expected to generate 0.44 times more return on investment than Focus Home. However, Martin Marietta Materials is 2.3 times less risky than Focus Home. It trades about 0.17 of its potential returns per unit of risk. Focus Home Interactive is currently generating about -0.28 per unit of risk. If you would invest 50,100 in Martin Marietta Materials on November 4, 2024 and sell it today you would earn a total of 2,180 from holding Martin Marietta Materials or generate 4.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Martin Marietta Materials vs. Focus Home Interactive
Performance |
| Timeline |
| Martin Marietta Materials |
| Focus Home Interactive |
Martin Marietta and Focus Home Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Martin Marietta and Focus Home
The main advantage of trading using opposite Martin Marietta and Focus Home positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Martin Marietta position performs unexpectedly, Focus Home 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 Focus Home will offset losses from the drop in Focus Home's long position.| Martin Marietta vs. VULCAN MATERIALS | Martin Marietta vs. MONEYSUPERMARKET | Martin Marietta vs. Applied Materials | Martin Marietta vs. United Natural Foods |
| Focus Home vs. SIDETRADE EO 1 | Focus Home vs. CarsalesCom | Focus Home vs. DENTSPLY SIRONA | Focus Home vs. CARSALESCOM |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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