Correlation Between Martin Marietta and EMBARK EDUCATION
Can any of the company-specific risk be diversified away by investing in both Martin Marietta and EMBARK EDUCATION 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 EMBARK EDUCATION 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 EMBARK EDUCATION LTD, you can compare the effects of market volatilities on Martin Marietta and EMBARK EDUCATION 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 EMBARK EDUCATION. Check out your portfolio center. Please also check ongoing floating volatility patterns of Martin Marietta and EMBARK EDUCATION.
Diversification Opportunities for Martin Marietta and EMBARK EDUCATION
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Martin and EMBARK is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Martin Marietta Materials and EMBARK EDUCATION LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMBARK EDUCATION LTD 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 EMBARK EDUCATION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMBARK EDUCATION LTD has no effect on the direction of Martin Marietta i.e., Martin Marietta and EMBARK EDUCATION go up and down completely randomly.
Pair Corralation between Martin Marietta and EMBARK EDUCATION
Assuming the 90 days trading horizon Martin Marietta Materials is expected to generate 2.49 times more return on investment than EMBARK EDUCATION. However, Martin Marietta is 2.49 times more volatile than EMBARK EDUCATION LTD. It trades about 0.09 of its potential returns per unit of risk. EMBARK EDUCATION LTD is currently generating about 0.12 per unit of risk. If you would invest 42,091 in Martin Marietta Materials on August 26, 2024 and sell it today you would earn a total of 15,189 from holding Martin Marietta Materials or generate 36.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Martin Marietta Materials vs. EMBARK EDUCATION LTD
Performance |
| Timeline |
| Martin Marietta Materials |
| EMBARK EDUCATION LTD |
Martin Marietta and EMBARK EDUCATION Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Martin Marietta and EMBARK EDUCATION
The main advantage of trading using opposite Martin Marietta and EMBARK EDUCATION positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Martin Marietta position performs unexpectedly, EMBARK EDUCATION 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 EMBARK EDUCATION will offset losses from the drop in EMBARK EDUCATION's long position.| Martin Marietta vs. Apple Inc | Martin Marietta vs. Apple Inc | Martin Marietta vs. Apple Inc | Martin Marietta vs. Apple Inc |
| EMBARK EDUCATION vs. APPLIED MATERIALS | EMBARK EDUCATION vs. COPLAND ROAD CAPITAL | EMBARK EDUCATION vs. Vulcan Materials | EMBARK EDUCATION vs. Fukuyama Transporting Co |
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 CEOs Directory module to screen CEOs from public companies around the world.
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