Correlation Between Martin Marietta and Fast Retailing
Can any of the company-specific risk be diversified away by investing in both Martin Marietta and Fast Retailing 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 Fast Retailing 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 Fast Retailing Co, you can compare the effects of market volatilities on Martin Marietta and Fast Retailing 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 Fast Retailing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Martin Marietta and Fast Retailing.
Diversification Opportunities for Martin Marietta and Fast Retailing
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Martin and Fast is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Martin Marietta Materials and Fast Retailing Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fast Retailing 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 Fast Retailing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fast Retailing has no effect on the direction of Martin Marietta i.e., Martin Marietta and Fast Retailing go up and down completely randomly.
Pair Corralation between Martin Marietta and Fast Retailing
Assuming the 90 days trading horizon Martin Marietta Materials is expected to under-perform the Fast Retailing. But the stock apears to be less risky and, when comparing its historical volatility, Martin Marietta Materials is 1.37 times less risky than Fast Retailing. The stock trades about -0.28 of its potential returns per unit of risk. The Fast Retailing Co is currently generating about 0.45 of returns per unit of risk over similar time horizon. If you would invest 29,000 in Fast Retailing Co on September 13, 2024 and sell it today you would earn a total of 4,620 from holding Fast Retailing Co or generate 15.93% 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. Fast Retailing Co
Performance |
| Timeline |
| Martin Marietta Materials |
| Fast Retailing |
Martin Marietta and Fast Retailing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Martin Marietta and Fast Retailing
The main advantage of trading using opposite Martin Marietta and Fast Retailing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Martin Marietta position performs unexpectedly, Fast Retailing 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 Fast Retailing will offset losses from the drop in Fast Retailing's long position.| Martin Marietta vs. Apple Inc | Martin Marietta vs. Apple Inc | Martin Marietta vs. Apple Inc | Martin Marietta vs. Apple Inc |
| Fast Retailing vs. Apple Inc | Fast Retailing vs. Apple Inc | Fast Retailing vs. Apple Inc | Fast Retailing 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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