Correlation Between Martin Marietta and NESTE OYJ
Can any of the company-specific risk be diversified away by investing in both Martin Marietta and NESTE OYJ 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 NESTE OYJ 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 NESTE OYJ UNSPADR, you can compare the effects of market volatilities on Martin Marietta and NESTE OYJ 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 NESTE OYJ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Martin Marietta and NESTE OYJ.
Diversification Opportunities for Martin Marietta and NESTE OYJ
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Martin and NESTE is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Martin Marietta Materials and NESTE OYJ UNSPADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NESTE OYJ UNSPADR 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 NESTE OYJ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NESTE OYJ UNSPADR has no effect on the direction of Martin Marietta i.e., Martin Marietta and NESTE OYJ go up and down completely randomly.
Pair Corralation between Martin Marietta and NESTE OYJ
Assuming the 90 days trading horizon Martin Marietta Materials is expected to generate 0.53 times more return on investment than NESTE OYJ. However, Martin Marietta Materials is 1.89 times less risky than NESTE OYJ. It trades about 0.06 of its potential returns per unit of risk. NESTE OYJ UNSPADR is currently generating about -0.08 per unit of risk. If you would invest 40,000 in Martin Marietta Materials on September 12, 2024 and sell it today you would earn a total of 13,520 from holding Martin Marietta Materials or generate 33.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Martin Marietta Materials vs. NESTE OYJ UNSPADR
Performance |
| Timeline |
| Martin Marietta Materials |
| NESTE OYJ UNSPADR |
Martin Marietta and NESTE OYJ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Martin Marietta and NESTE OYJ
The main advantage of trading using opposite Martin Marietta and NESTE OYJ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Martin Marietta position performs unexpectedly, NESTE OYJ 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 NESTE OYJ will offset losses from the drop in NESTE OYJ's long position.| Martin Marietta vs. Apple Inc | Martin Marietta vs. Apple Inc | Martin Marietta vs. Apple Inc | Martin Marietta vs. Apple Inc |
| NESTE OYJ vs. Vulcan Materials | NESTE OYJ vs. Martin Marietta Materials | NESTE OYJ vs. American Eagle Outfitters | NESTE OYJ vs. Heidelberg Materials AG |
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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