Correlation Between Martin Marietta and Beijing Media
Can any of the company-specific risk be diversified away by investing in both Martin Marietta and Beijing Media 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 Beijing Media 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 Beijing Media, you can compare the effects of market volatilities on Martin Marietta and Beijing Media 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 Beijing Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Martin Marietta and Beijing Media.
Diversification Opportunities for Martin Marietta and Beijing Media
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Martin and Beijing is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Martin Marietta Materials and Beijing Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijing Media 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 Beijing Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijing Media has no effect on the direction of Martin Marietta i.e., Martin Marietta and Beijing Media go up and down completely randomly.
Pair Corralation between Martin Marietta and Beijing Media
Assuming the 90 days trading horizon Martin Marietta Materials is expected to generate 0.32 times more return on investment than Beijing Media. However, Martin Marietta Materials is 3.09 times less risky than Beijing Media. It trades about 0.11 of its potential returns per unit of risk. Beijing Media is currently generating about 0.01 per unit of risk. If you would invest 53,305 in Martin Marietta Materials on September 5, 2024 and sell it today you would earn a total of 2,035 from holding Martin Marietta Materials or generate 3.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Martin Marietta Materials vs. Beijing Media
Performance |
| Timeline |
| Martin Marietta Materials |
| Beijing Media |
Martin Marietta and Beijing Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Martin Marietta and Beijing Media
The main advantage of trading using opposite Martin Marietta and Beijing Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Martin Marietta position performs unexpectedly, Beijing Media 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 Beijing Media will offset losses from the drop in Beijing Media's long position.| Martin Marietta vs. Insteel Industries | Martin Marietta vs. BLUESCOPE STEEL | Martin Marietta vs. KINGBOARD CHEMICAL | Martin Marietta vs. CECO ENVIRONMENTAL |
| Beijing Media vs. GigaMedia | Beijing Media vs. BURLINGTON STORES | Beijing Media vs. OURGAME INTHOLDL 00005 | Beijing Media vs. MARKET VECTR RETAIL |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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