Correlation Between Martin Marietta and CSL
Can any of the company-specific risk be diversified away by investing in both Martin Marietta and CSL 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 CSL 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 CSL Limited, you can compare the effects of market volatilities on Martin Marietta and CSL 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 CSL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Martin Marietta and CSL.
Diversification Opportunities for Martin Marietta and CSL
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Martin and CSL is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Martin Marietta Materials and CSL Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSL Limited 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 CSL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSL Limited has no effect on the direction of Martin Marietta i.e., Martin Marietta and CSL go up and down completely randomly.
Pair Corralation between Martin Marietta and CSL
Assuming the 90 days trading horizon Martin Marietta Materials is expected to generate 1.15 times more return on investment than CSL. However, Martin Marietta is 1.15 times more volatile than CSL Limited. It trades about 0.09 of its potential returns per unit of risk. CSL Limited is currently generating about 0.05 per unit of risk. If you would invest 40,705 in Martin Marietta Materials on September 1, 2024 and sell it today you would earn a total of 15,495 from holding Martin Marietta Materials or generate 38.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Martin Marietta Materials vs. CSL Limited
Performance |
| Timeline |
| Martin Marietta Materials |
| CSL Limited |
Martin Marietta and CSL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Martin Marietta and CSL
The main advantage of trading using opposite Martin Marietta and CSL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Martin Marietta position performs unexpectedly, CSL 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 CSL will offset losses from the drop in CSL's long position.| Martin Marietta vs. OAKTRSPECLENDNEW | Martin Marietta vs. REVO INSURANCE SPA | Martin Marietta vs. The Hanover Insurance | Martin Marietta vs. Reinsurance Group of |
| CSL vs. ADRIATIC METALS LS 013355 | CSL vs. PT Bank Maybank | CSL vs. Heartland Financial USA | CSL vs. Regions Financial |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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