Correlation Between Martin Marietta and Merit Medical
Can any of the company-specific risk be diversified away by investing in both Martin Marietta and Merit Medical 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 Merit Medical 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 Merit Medical Systems, you can compare the effects of market volatilities on Martin Marietta and Merit Medical 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 Merit Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Martin Marietta and Merit Medical.
Diversification Opportunities for Martin Marietta and Merit Medical
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Martin and Merit is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Martin Marietta Materials and Merit Medical Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merit Medical Systems 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 Merit Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merit Medical Systems has no effect on the direction of Martin Marietta i.e., Martin Marietta and Merit Medical go up and down completely randomly.
Pair Corralation between Martin Marietta and Merit Medical
Assuming the 90 days trading horizon Martin Marietta Materials is expected to generate 0.88 times more return on investment than Merit Medical. However, Martin Marietta Materials is 1.13 times less risky than Merit Medical. It trades about 0.07 of its potential returns per unit of risk. Merit Medical Systems is currently generating about 0.05 per unit of risk. If you would invest 32,650 in Martin Marietta Materials on October 28, 2024 and sell it today you would earn a total of 19,690 from holding Martin Marietta Materials or generate 60.31% 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. Merit Medical Systems
Performance |
| Timeline |
| Martin Marietta Materials |
| Merit Medical Systems |
Martin Marietta and Merit Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Martin Marietta and Merit Medical
The main advantage of trading using opposite Martin Marietta and Merit Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Martin Marietta position performs unexpectedly, Merit Medical 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 Merit Medical will offset losses from the drop in Merit Medical's long position.| Martin Marietta vs. Digilife Technologies Limited | Martin Marietta vs. Addtech AB | Martin Marietta vs. THORNEY TECHS LTD | Martin Marietta vs. Carsales |
| Merit Medical vs. GRUPO CARSO A1 | Merit Medical vs. INTER CARS SA | Merit Medical vs. Silicon Motion Technology | Merit Medical vs. Sekisui Chemical Co |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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