Correlation Between Martin Marietta and National Storage
Can any of the company-specific risk be diversified away by investing in both Martin Marietta and National Storage 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 National Storage 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 National Storage Affiliates, you can compare the effects of market volatilities on Martin Marietta and National Storage 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 National Storage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Martin Marietta and National Storage.
Diversification Opportunities for Martin Marietta and National Storage
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Martin and National is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Martin Marietta Materials and National Storage Affiliates in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Storage Aff 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 National Storage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Storage Aff has no effect on the direction of Martin Marietta i.e., Martin Marietta and National Storage go up and down completely randomly.
Pair Corralation between Martin Marietta and National Storage
Assuming the 90 days trading horizon Martin Marietta is expected to generate 1.24 times less return on investment than National Storage. But when comparing it to its historical volatility, Martin Marietta Materials is 1.28 times less risky than National Storage. It trades about 0.19 of its potential returns per unit of risk. National Storage Affiliates is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 3,956 in National Storage Affiliates on August 29, 2024 and sell it today you would earn a total of 322.00 from holding National Storage Affiliates or generate 8.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Martin Marietta Materials vs. National Storage Affiliates
Performance |
| Timeline |
| Martin Marietta Materials |
| National Storage Aff |
Martin Marietta and National Storage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Martin Marietta and National Storage
The main advantage of trading using opposite Martin Marietta and National Storage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Martin Marietta position performs unexpectedly, National Storage 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 National Storage will offset losses from the drop in National Storage's long position.| Martin Marietta vs. Apple Inc | Martin Marietta vs. Apple Inc | Martin Marietta vs. Apple Inc | Martin Marietta vs. Apple Inc |
| National Storage vs. Superior Plus Corp | National Storage vs. Origin Agritech | National Storage vs. Identiv | National Storage vs. INTUITIVE SURGICAL |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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