Correlation Between Martin Marietta and Fidelity National
Can any of the company-specific risk be diversified away by investing in both Martin Marietta and Fidelity National 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 Fidelity National 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 Fidelity National Information, you can compare the effects of market volatilities on Martin Marietta and Fidelity National 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 Fidelity National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Martin Marietta and Fidelity National.
Diversification Opportunities for Martin Marietta and Fidelity National
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Martin and Fidelity is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Martin Marietta Materials and Fidelity National Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity National 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 Fidelity National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity National has no effect on the direction of Martin Marietta i.e., Martin Marietta and Fidelity National go up and down completely randomly.
Pair Corralation between Martin Marietta and Fidelity National
Assuming the 90 days trading horizon Martin Marietta is expected to generate 2.01 times less return on investment than Fidelity National. In addition to that, Martin Marietta is 1.09 times more volatile than Fidelity National Information. It trades about 0.07 of its total potential returns per unit of risk. Fidelity National Information is currently generating about 0.15 per unit of volatility. If you would invest 4,825 in Fidelity National Information on September 15, 2024 and sell it today you would earn a total of 3,277 from holding Fidelity National Information or generate 67.92% 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. Fidelity National Information
Performance |
| Timeline |
| Martin Marietta Materials |
| Fidelity National |
Martin Marietta and Fidelity National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Martin Marietta and Fidelity National
The main advantage of trading using opposite Martin Marietta and Fidelity National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Martin Marietta position performs unexpectedly, Fidelity National 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 Fidelity National will offset losses from the drop in Fidelity National's long position.| Martin Marietta vs. Apple Inc | Martin Marietta vs. Apple Inc | Martin Marietta vs. Apple Inc | Martin Marietta vs. Apple Inc |
| Fidelity National vs. Rayonier Advanced Materials | Fidelity National vs. Major Drilling Group | Fidelity National vs. Martin Marietta Materials | Fidelity National vs. Eagle 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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