Correlation Between Martin Marietta and LVMH Mot
Can any of the company-specific risk be diversified away by investing in both Martin Marietta and LVMH Mot 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 LVMH Mot 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 LVMH Mot Hennessy, you can compare the effects of market volatilities on Martin Marietta and LVMH Mot 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 LVMH Mot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Martin Marietta and LVMH Mot.
Diversification Opportunities for Martin Marietta and LVMH Mot
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Martin and LVMH is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Martin Marietta Materials and LVMH Mot Hennessy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LVMH Mot Hennessy 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 LVMH Mot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LVMH Mot Hennessy has no effect on the direction of Martin Marietta i.e., Martin Marietta and LVMH Mot go up and down completely randomly.
Pair Corralation between Martin Marietta and LVMH Mot
Assuming the 90 days trading horizon Martin Marietta is expected to generate 4.22 times less return on investment than LVMH Mot. But when comparing it to its historical volatility, Martin Marietta Materials is 2.06 times less risky than LVMH Mot. It trades about 0.15 of its potential returns per unit of risk. LVMH Mot Hennessy is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 63,310 in LVMH Mot Hennessy on October 29, 2024 and sell it today you would earn a total of 10,050 from holding LVMH Mot Hennessy or generate 15.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Martin Marietta Materials vs. LVMH Mot Hennessy
Performance |
| Timeline |
| Martin Marietta Materials |
| LVMH Mot Hennessy |
Martin Marietta and LVMH Mot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Martin Marietta and LVMH Mot
The main advantage of trading using opposite Martin Marietta and LVMH Mot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Martin Marietta position performs unexpectedly, LVMH Mot 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 LVMH Mot will offset losses from the drop in LVMH Mot's long position.| Martin Marietta vs. AECOM TECHNOLOGY | Martin Marietta vs. Vishay Intertechnology | Martin Marietta vs. Micron Technology | Martin Marietta vs. Computershare Limited |
| LVMH Mot vs. CARSALESCOM | LVMH Mot vs. Stag Industrial | LVMH Mot vs. Canon Marketing Japan | LVMH Mot vs. MCEWEN MINING 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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