Correlation Between Microsoft and Martin Marietta
Can any of the company-specific risk be diversified away by investing in both Microsoft and Martin Marietta 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 Microsoft and Martin Marietta into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Martin Marietta Materials,, you can compare the effects of market volatilities on Microsoft and Martin Marietta 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 Microsoft with a short position of Martin Marietta. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Martin Marietta.
Diversification Opportunities for Microsoft and Martin Marietta
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Microsoft and Martin is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Martin Marietta Materials, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Martin Marietta Mate and Microsoft 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 Microsoft are associated (or correlated) with Martin Marietta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Martin Marietta Mate has no effect on the direction of Microsoft i.e., Microsoft and Martin Marietta go up and down completely randomly.
Pair Corralation between Microsoft and Martin Marietta
If you would invest 56,250 in Martin Marietta Materials, on November 7, 2024 and sell it today you would earn a total of 0.00 from holding Martin Marietta Materials, or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 91.3% |
| Values | Daily Returns |
Microsoft vs. Martin Marietta Materials,
Performance |
| Timeline |
| Microsoft |
| Martin Marietta Mate |
Microsoft and Martin Marietta Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Martin Marietta
The main advantage of trading using opposite Microsoft and Martin Marietta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, Martin Marietta 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 Martin Marietta will offset losses from the drop in Martin Marietta's long position.| Microsoft vs. Westinghouse Air Brake | Microsoft vs. Alaska Air Group, | Microsoft vs. Pentair plc | Microsoft vs. Synchrony Financial |
| Martin Marietta vs. Discover Financial Services | Martin Marietta vs. Deutsche Bank Aktiengesellschaft | Martin Marietta vs. Prudential Financial | Martin Marietta vs. The Hartford Financial |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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