Correlation Between Martin Marietta and Seven West
Can any of the company-specific risk be diversified away by investing in both Martin Marietta and Seven West 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 Seven West 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 Seven West Media, you can compare the effects of market volatilities on Martin Marietta and Seven West 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 Seven West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Martin Marietta and Seven West.
Diversification Opportunities for Martin Marietta and Seven West
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Martin and Seven is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Martin Marietta Materials and Seven West Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seven West Media 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 Seven West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seven West Media has no effect on the direction of Martin Marietta i.e., Martin Marietta and Seven West go up and down completely randomly.
Pair Corralation between Martin Marietta and Seven West
Assuming the 90 days trading horizon Martin Marietta Materials is expected to generate 0.49 times more return on investment than Seven West. However, Martin Marietta Materials is 2.05 times less risky than Seven West. It trades about 0.11 of its potential returns per unit of risk. Seven West Media is currently generating about -0.09 per unit of risk. If you would invest 53,305 in Martin Marietta Materials on September 5, 2024 and sell it today you would earn a total of 2,035 from holding Martin Marietta Materials or generate 3.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Martin Marietta Materials vs. Seven West Media
Performance |
| Timeline |
| Martin Marietta Materials |
| Seven West Media |
Martin Marietta and Seven West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Martin Marietta and Seven West
The main advantage of trading using opposite Martin Marietta and Seven West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Martin Marietta position performs unexpectedly, Seven West 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 Seven West will offset losses from the drop in Seven West's long position.| Martin Marietta vs. Insteel Industries | Martin Marietta vs. BLUESCOPE STEEL | Martin Marietta vs. KINGBOARD CHEMICAL | Martin Marietta vs. CECO ENVIRONMENTAL |
| Seven West vs. EMBARK EDUCATION LTD | Seven West vs. Tencent Music Entertainment | Seven West vs. Lion One Metals | Seven West vs. IDP EDUCATION LTD |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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