Correlation Between Martin Marietta and NKT AS
Can any of the company-specific risk be diversified away by investing in both Martin Marietta and NKT AS 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 NKT AS 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 NKT AS, you can compare the effects of market volatilities on Martin Marietta and NKT AS 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 NKT AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Martin Marietta and NKT AS.
Diversification Opportunities for Martin Marietta and NKT AS
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Martin and NKT is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Martin Marietta Materials and NKT AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NKT AS 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 NKT AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NKT AS has no effect on the direction of Martin Marietta i.e., Martin Marietta and NKT AS go up and down completely randomly.
Pair Corralation between Martin Marietta and NKT AS
Assuming the 90 days trading horizon Martin Marietta is expected to generate 1.19 times less return on investment than NKT AS. But when comparing it to its historical volatility, Martin Marietta Materials is 1.53 times less risky than NKT AS. It trades about 0.06 of its potential returns per unit of risk. NKT AS is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 5,095 in NKT AS on September 12, 2024 and sell it today you would earn a total of 1,795 from holding NKT AS or generate 35.23% 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. NKT AS
Performance |
| Timeline |
| Martin Marietta Materials |
| NKT AS |
Martin Marietta and NKT AS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Martin Marietta and NKT AS
The main advantage of trading using opposite Martin Marietta and NKT AS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Martin Marietta position performs unexpectedly, NKT AS 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 NKT AS will offset losses from the drop in NKT AS's long position.| Martin Marietta vs. Apple Inc | Martin Marietta vs. Apple Inc | Martin Marietta vs. Apple Inc | Martin Marietta vs. Apple Inc |
| NKT AS vs. Taiwan Semiconductor Manufacturing | NKT AS vs. Tower Semiconductor | NKT AS vs. Elmos Semiconductor SE | NKT AS vs. Meli Hotels International |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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