Correlation Between Martin Marietta and Waste Management
Can any of the company-specific risk be diversified away by investing in both Martin Marietta and Waste Management 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 Waste Management 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 Waste Management, you can compare the effects of market volatilities on Martin Marietta and Waste Management 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 Waste Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of Martin Marietta and Waste Management.
Diversification Opportunities for Martin Marietta and Waste Management
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Martin and Waste is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Martin Marietta Materials and Waste Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waste Management 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 Waste Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waste Management has no effect on the direction of Martin Marietta i.e., Martin Marietta and Waste Management go up and down completely randomly.
Pair Corralation between Martin Marietta and Waste Management
Assuming the 90 days trading horizon Martin Marietta Materials is expected to generate 1.31 times more return on investment than Waste Management. However, Martin Marietta is 1.31 times more volatile than Waste Management. It trades about 0.07 of its potential returns per unit of risk. Waste Management is currently generating about 0.07 per unit of risk. If you would invest 32,774 in Martin Marietta Materials on October 29, 2024 and sell it today you would earn a total of 19,566 from holding Martin Marietta Materials or generate 59.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Martin Marietta Materials vs. Waste Management
Performance |
| Timeline |
| Martin Marietta Materials |
| Waste Management |
Martin Marietta and Waste Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Martin Marietta and Waste Management
The main advantage of trading using opposite Martin Marietta and Waste Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Martin Marietta position performs unexpectedly, Waste Management 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 Waste Management will offset losses from the drop in Waste Management's long position.| Martin Marietta vs. AECOM TECHNOLOGY | Martin Marietta vs. Vishay Intertechnology | Martin Marietta vs. Micron Technology | Martin Marietta vs. Computershare Limited |
| Waste Management vs. FUYO GENERAL LEASE | Waste Management vs. Benchmark Electronics | Waste Management vs. Richardson Electronics | Waste Management vs. Sixt Leasing SE |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
Other Complementary Tools
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world |