Correlation Between Martin Marietta and EAGLE MATERIALS
Can any of the company-specific risk be diversified away by investing in both Martin Marietta and EAGLE MATERIALS 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 EAGLE MATERIALS 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 EAGLE MATERIALS, you can compare the effects of market volatilities on Martin Marietta and EAGLE MATERIALS 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 EAGLE MATERIALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Martin Marietta and EAGLE MATERIALS.
Diversification Opportunities for Martin Marietta and EAGLE MATERIALS
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Martin and EAGLE is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Martin Marietta Materials and EAGLE MATERIALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EAGLE MATERIALS 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 EAGLE MATERIALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EAGLE MATERIALS has no effect on the direction of Martin Marietta i.e., Martin Marietta and EAGLE MATERIALS go up and down completely randomly.
Pair Corralation between Martin Marietta and EAGLE MATERIALS
Assuming the 90 days trading horizon Martin Marietta is expected to generate 1.64 times less return on investment than EAGLE MATERIALS. But when comparing it to its historical volatility, Martin Marietta Materials is 1.23 times less risky than EAGLE MATERIALS. It trades about 0.08 of its potential returns per unit of risk. EAGLE MATERIALS is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 12,551 in EAGLE MATERIALS on August 26, 2024 and sell it today you would earn a total of 17,249 from holding EAGLE MATERIALS or generate 137.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Martin Marietta Materials vs. EAGLE MATERIALS
Performance |
| Timeline |
| Martin Marietta Materials |
| EAGLE MATERIALS |
Martin Marietta and EAGLE MATERIALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Martin Marietta and EAGLE MATERIALS
The main advantage of trading using opposite Martin Marietta and EAGLE MATERIALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Martin Marietta position performs unexpectedly, EAGLE MATERIALS 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 EAGLE MATERIALS will offset losses from the drop in EAGLE MATERIALS'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 |
| EAGLE MATERIALS vs. Apple Inc | EAGLE MATERIALS vs. Apple Inc | EAGLE MATERIALS vs. Apple Inc | EAGLE MATERIALS vs. Apple Inc |
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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