Correlation Between Martin Marietta and Performance Food
Can any of the company-specific risk be diversified away by investing in both Martin Marietta and Performance Food 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 Performance Food 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 Performance Food Group, you can compare the effects of market volatilities on Martin Marietta and Performance Food 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 Performance Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Martin Marietta and Performance Food.
Diversification Opportunities for Martin Marietta and Performance Food
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Martin and Performance is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Martin Marietta Materials and Performance Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Performance Food 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 Performance Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Performance Food has no effect on the direction of Martin Marietta i.e., Martin Marietta and Performance Food go up and down completely randomly.
Pair Corralation between Martin Marietta and Performance Food
Assuming the 90 days trading horizon Martin Marietta is expected to generate 1.05 times less return on investment than Performance Food. But when comparing it to its historical volatility, Martin Marietta Materials is 1.06 times less risky than Performance Food. It trades about 0.06 of its potential returns per unit of risk. Performance Food Group is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 5,450 in Performance Food Group on October 16, 2024 and sell it today you would earn a total of 2,800 from holding Performance Food Group or generate 51.38% 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. Performance Food Group
Performance |
| Timeline |
| Martin Marietta Materials |
| Performance Food |
Martin Marietta and Performance Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Martin Marietta and Performance Food
The main advantage of trading using opposite Martin Marietta and Performance Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Martin Marietta position performs unexpectedly, Performance Food 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 Performance Food will offset losses from the drop in Performance Food's long position.| Martin Marietta vs. ANTA SPORTS PRODUCT | Martin Marietta vs. Minerals Technologies | Martin Marietta vs. THORNEY TECHS LTD | Martin Marietta vs. Seven West Media |
| Performance Food vs. VULCAN MATERIALS | Performance Food vs. Easy Software AG | Performance Food vs. Martin Marietta Materials | Performance Food vs. Rayonier Advanced 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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