Correlation Between Martin Marietta and Aluminumof China
Can any of the company-specific risk be diversified away by investing in both Martin Marietta and Aluminumof China 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 Aluminumof China 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 Aluminum of, you can compare the effects of market volatilities on Martin Marietta and Aluminumof China 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 Aluminumof China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Martin Marietta and Aluminumof China.
Diversification Opportunities for Martin Marietta and Aluminumof China
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Martin and Aluminumof is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Martin Marietta Materials and Aluminum of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aluminumof China 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 Aluminumof China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aluminumof China has no effect on the direction of Martin Marietta i.e., Martin Marietta and Aluminumof China go up and down completely randomly.
Pair Corralation between Martin Marietta and Aluminumof China
Assuming the 90 days trading horizon Martin Marietta is expected to generate 1.67 times less return on investment than Aluminumof China. But when comparing it to its historical volatility, Martin Marietta Materials is 2.27 times less risky than Aluminumof China. It trades about 0.08 of its potential returns per unit of risk. Aluminum of is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 29.00 in Aluminum of on August 25, 2024 and sell it today you would earn a total of 28.00 from holding Aluminum of or generate 96.55% 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. Aluminum of
Performance |
| Timeline |
| Martin Marietta Materials |
| Aluminumof China |
Martin Marietta and Aluminumof China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Martin Marietta and Aluminumof China
The main advantage of trading using opposite Martin Marietta and Aluminumof China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Martin Marietta position performs unexpectedly, Aluminumof China 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 Aluminumof China will offset losses from the drop in Aluminumof China's long position.| Martin Marietta vs. PLAY2CHILL SA ZY | Martin Marietta vs. EVS Broadcast Equipment | Martin Marietta vs. Fukuyama Transporting Co | Martin Marietta vs. Texas Roadhouse |
| Aluminumof China vs. Materialise NV | Aluminumof China vs. Air Transport Services | Aluminumof China vs. Martin Marietta Materials | Aluminumof China vs. Summit Materials |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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