Correlation Between Martin Marietta and KINGBOARD CHEMICAL
Can any of the company-specific risk be diversified away by investing in both Martin Marietta and KINGBOARD CHEMICAL 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 KINGBOARD CHEMICAL 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 KINGBOARD CHEMICAL, you can compare the effects of market volatilities on Martin Marietta and KINGBOARD CHEMICAL 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 KINGBOARD CHEMICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Martin Marietta and KINGBOARD CHEMICAL.
Diversification Opportunities for Martin Marietta and KINGBOARD CHEMICAL
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Martin and KINGBOARD is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Martin Marietta Materials and KINGBOARD CHEMICAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KINGBOARD CHEMICAL 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 KINGBOARD CHEMICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KINGBOARD CHEMICAL has no effect on the direction of Martin Marietta i.e., Martin Marietta and KINGBOARD CHEMICAL go up and down completely randomly.
Pair Corralation between Martin Marietta and KINGBOARD CHEMICAL
Assuming the 90 days trading horizon Martin Marietta Materials is expected to generate 0.77 times more return on investment than KINGBOARD CHEMICAL. However, Martin Marietta Materials is 1.31 times less risky than KINGBOARD CHEMICAL. It trades about 0.08 of its potential returns per unit of risk. KINGBOARD CHEMICAL is currently generating about -0.01 per unit of risk. If you would invest 54,700 in Martin Marietta Materials on September 1, 2024 and sell it today you would earn a total of 1,500 from holding Martin Marietta Materials or generate 2.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Martin Marietta Materials vs. KINGBOARD CHEMICAL
Performance |
| Timeline |
| Martin Marietta Materials |
| KINGBOARD CHEMICAL |
Martin Marietta and KINGBOARD CHEMICAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Martin Marietta and KINGBOARD CHEMICAL
The main advantage of trading using opposite Martin Marietta and KINGBOARD CHEMICAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Martin Marietta position performs unexpectedly, KINGBOARD CHEMICAL 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 KINGBOARD CHEMICAL will offset losses from the drop in KINGBOARD CHEMICAL'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 |
| KINGBOARD CHEMICAL vs. TSOGO SUN GAMING | KINGBOARD CHEMICAL vs. NEWELL RUBBERMAID | KINGBOARD CHEMICAL vs. Boyd Gaming | KINGBOARD CHEMICAL vs. Martin Marietta Materials |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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