Correlation Between Martin Marietta and TERADATA
Can any of the company-specific risk be diversified away by investing in both Martin Marietta and TERADATA 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 TERADATA 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 TERADATA, you can compare the effects of market volatilities on Martin Marietta and TERADATA 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 TERADATA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Martin Marietta and TERADATA.
Diversification Opportunities for Martin Marietta and TERADATA
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Martin and TERADATA is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Martin Marietta Materials and TERADATA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TERADATA 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 TERADATA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TERADATA has no effect on the direction of Martin Marietta i.e., Martin Marietta and TERADATA go up and down completely randomly.
Pair Corralation between Martin Marietta and TERADATA
Assuming the 90 days trading horizon Martin Marietta Materials is expected to generate 0.88 times more return on investment than TERADATA. However, Martin Marietta Materials is 1.13 times less risky than TERADATA. It trades about 0.15 of its potential returns per unit of risk. TERADATA is currently generating about -0.02 per unit of risk. If you would invest 53,520 in Martin Marietta Materials on August 31, 2024 and sell it today you would earn a total of 2,920 from holding Martin Marietta Materials or generate 5.46% 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. TERADATA
Performance |
| Timeline |
| Martin Marietta Materials |
| TERADATA |
Martin Marietta and TERADATA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Martin Marietta and TERADATA
The main advantage of trading using opposite Martin Marietta and TERADATA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Martin Marietta position performs unexpectedly, TERADATA 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 TERADATA will offset losses from the drop in TERADATA's long position.| Martin Marietta vs. Apple Inc | Martin Marietta vs. Apple Inc | Martin Marietta vs. Apple Inc | Martin Marietta vs. Apple Inc |
| TERADATA vs. Hyster Yale Materials Handling | TERADATA vs. Martin Marietta Materials | TERADATA vs. Applied Materials | TERADATA vs. Sumitomo Rubber 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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