Correlation Between Martin Marietta and SMA Solar
Can any of the company-specific risk be diversified away by investing in both Martin Marietta and SMA Solar 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 SMA Solar 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 SMA Solar Technology, you can compare the effects of market volatilities on Martin Marietta and SMA Solar 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 SMA Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Martin Marietta and SMA Solar.
Diversification Opportunities for Martin Marietta and SMA Solar
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Martin and SMA is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Martin Marietta Materials and SMA Solar Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SMA Solar Technology 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 SMA Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SMA Solar Technology has no effect on the direction of Martin Marietta i.e., Martin Marietta and SMA Solar go up and down completely randomly.
Pair Corralation between Martin Marietta and SMA Solar
Assuming the 90 days trading horizon Martin Marietta Materials is expected to generate 0.33 times more return on investment than SMA Solar. However, Martin Marietta Materials is 3.06 times less risky than SMA Solar. It trades about 0.07 of its potential returns per unit of risk. SMA Solar Technology is currently generating about -0.06 per unit of risk. If you would invest 48,242 in Martin Marietta Materials on October 31, 2024 and sell it today you would earn a total of 3,678 from holding Martin Marietta Materials or generate 7.62% 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. SMA Solar Technology
Performance |
| Timeline |
| Martin Marietta Materials |
| SMA Solar Technology |
Martin Marietta and SMA Solar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Martin Marietta and SMA Solar
The main advantage of trading using opposite Martin Marietta and SMA Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Martin Marietta position performs unexpectedly, SMA Solar 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 SMA Solar will offset losses from the drop in SMA Solar's long position.| Martin Marietta vs. ASPEN TECHINC DL | Martin Marietta vs. Universal Entertainment | Martin Marietta vs. Agilent Technologies | Martin Marietta vs. PROSIEBENSAT1 MEDIADR4 |
| SMA Solar vs. Salesforce | SMA Solar vs. Insteel Industries | SMA Solar vs. MARKET VECTR RETAIL | SMA Solar vs. Xiwang Special Steel |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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