Correlation Between Martin Marietta and XAAR PLC
Can any of the company-specific risk be diversified away by investing in both Martin Marietta and XAAR PLC 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 XAAR PLC 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 XAAR PLC LS 10, you can compare the effects of market volatilities on Martin Marietta and XAAR PLC 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 XAAR PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Martin Marietta and XAAR PLC.
Diversification Opportunities for Martin Marietta and XAAR PLC
-0.9 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Martin and XAAR is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding Martin Marietta Materials and XAAR PLC LS 10 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XAAR PLC LS 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 XAAR PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XAAR PLC LS has no effect on the direction of Martin Marietta i.e., Martin Marietta and XAAR PLC go up and down completely randomly.
Pair Corralation between Martin Marietta and XAAR PLC
Assuming the 90 days trading horizon Martin Marietta Materials is expected to generate 0.56 times more return on investment than XAAR PLC. However, Martin Marietta Materials is 1.79 times less risky than XAAR PLC. It trades about 0.01 of its potential returns per unit of risk. XAAR PLC LS 10 is currently generating about -0.09 per unit of risk. If you would invest 55,489 in Martin Marietta Materials on September 3, 2024 and sell it today you would earn a total of 711.00 from holding Martin Marietta Materials or generate 1.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Martin Marietta Materials vs. XAAR PLC LS 10
Performance |
| Timeline |
| Martin Marietta Materials |
| XAAR PLC LS |
Martin Marietta and XAAR PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Martin Marietta and XAAR PLC
The main advantage of trading using opposite Martin Marietta and XAAR PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Martin Marietta position performs unexpectedly, XAAR PLC 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 XAAR PLC will offset losses from the drop in XAAR PLC's long position.| Martin Marietta vs. SBI Insurance Group | Martin Marietta vs. Ping An Insurance | Martin Marietta vs. ScanSource | Martin Marietta vs. Reinsurance Group of |
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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