Correlation Between Martin Marietta and Herms International
Can any of the company-specific risk be diversified away by investing in both Martin Marietta and Herms International 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 Herms International 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 Herms International Socit, you can compare the effects of market volatilities on Martin Marietta and Herms International 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 Herms International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Martin Marietta and Herms International.
Diversification Opportunities for Martin Marietta and Herms International
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Martin and Herms is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Martin Marietta Materials and Herms International Socit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Herms International Socit 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 Herms International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Herms International Socit has no effect on the direction of Martin Marietta i.e., Martin Marietta and Herms International go up and down completely randomly.
Pair Corralation between Martin Marietta and Herms International
Assuming the 90 days trading horizon Martin Marietta Materials is expected to under-perform the Herms International. But the stock apears to be less risky and, when comparing its historical volatility, Martin Marietta Materials is 2.2 times less risky than Herms International. The stock trades about -0.65 of its potential returns per unit of risk. The Herms International Socit is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 206,400 in Herms International Socit on September 25, 2024 and sell it today you would earn a total of 24,900 from holding Herms International Socit or generate 12.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Martin Marietta Materials vs. Herms International Socit
Performance |
| Timeline |
| Martin Marietta Materials |
| Herms International Socit |
Martin Marietta and Herms International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Martin Marietta and Herms International
The main advantage of trading using opposite Martin Marietta and Herms International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Martin Marietta position performs unexpectedly, Herms International 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 Herms International will offset losses from the drop in Herms International's long position.| Martin Marietta vs. Dalata Hotel Group | Martin Marietta vs. UNITED UTILITIES GR | Martin Marietta vs. Harmony Gold Mining | Martin Marietta vs. GRIFFIN MINING LTD |
| Herms International vs. LVMH Mot Hennessy | Herms International vs. CHRISTIAN DIOR ADR14EO2 | Herms International vs. Christian Dior SE | Herms International vs. The Swatch Group |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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