Correlation Between Martin Marietta and SBM OFFSHORE
Can any of the company-specific risk be diversified away by investing in both Martin Marietta and SBM OFFSHORE 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 SBM OFFSHORE 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 SBM OFFSHORE, you can compare the effects of market volatilities on Martin Marietta and SBM OFFSHORE 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 SBM OFFSHORE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Martin Marietta and SBM OFFSHORE.
Diversification Opportunities for Martin Marietta and SBM OFFSHORE
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Martin and SBM is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Martin Marietta Materials and SBM OFFSHORE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SBM OFFSHORE 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 SBM OFFSHORE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SBM OFFSHORE has no effect on the direction of Martin Marietta i.e., Martin Marietta and SBM OFFSHORE go up and down completely randomly.
Pair Corralation between Martin Marietta and SBM OFFSHORE
Assuming the 90 days trading horizon Martin Marietta is expected to generate 1.44 times less return on investment than SBM OFFSHORE. But when comparing it to its historical volatility, Martin Marietta Materials is 1.13 times less risky than SBM OFFSHORE. It trades about 0.06 of its potential returns per unit of risk. SBM OFFSHORE is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,193 in SBM OFFSHORE on December 4, 2024 and sell it today you would earn a total of 843.00 from holding SBM OFFSHORE or generate 70.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Martin Marietta Materials vs. SBM OFFSHORE
Performance |
| Timeline |
| Martin Marietta Materials |
| SBM OFFSHORE |
Martin Marietta and SBM OFFSHORE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Martin Marietta and SBM OFFSHORE
The main advantage of trading using opposite Martin Marietta and SBM OFFSHORE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Martin Marietta position performs unexpectedly, SBM OFFSHORE 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 SBM OFFSHORE will offset losses from the drop in SBM OFFSHORE's long position.| Martin Marietta vs. OAKTRSPECLENDNEW | Martin Marietta vs. JSC Halyk bank | Martin Marietta vs. Virtu Financial | Martin Marietta vs. GRUPO CARSO A1 |
| SBM OFFSHORE vs. BORR DRILLING NEW | SBM OFFSHORE vs. Major Drilling Group | SBM OFFSHORE vs. CARSALESCOM | SBM OFFSHORE vs. ONWARD MEDICAL BV |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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