Correlation Between Reinsurance Group and Martin Marietta
Can any of the company-specific risk be diversified away by investing in both Reinsurance Group 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 Reinsurance Group and Martin Marietta into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Reinsurance Group of and Martin Marietta Materials, you can compare the effects of market volatilities on Reinsurance Group 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 Reinsurance Group with a short position of Martin Marietta. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reinsurance Group and Martin Marietta.
Diversification Opportunities for Reinsurance Group and Martin Marietta
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Reinsurance and Martin is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Reinsurance Group of and Martin Marietta Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Martin Marietta Materials and Reinsurance Group 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 Reinsurance Group of 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 Materials has no effect on the direction of Reinsurance Group i.e., Reinsurance Group and Martin Marietta go up and down completely randomly.
Pair Corralation between Reinsurance Group and Martin Marietta
Assuming the 90 days trading horizon Reinsurance Group of is expected to generate 1.12 times more return on investment than Martin Marietta. However, Reinsurance Group is 1.12 times more volatile than Martin Marietta Materials. It trades about 0.07 of its potential returns per unit of risk. Martin Marietta Materials is currently generating about 0.07 per unit of risk. If you would invest 12,736 in Reinsurance Group of on September 3, 2024 and sell it today you would earn a total of 8,864 from holding Reinsurance Group of or generate 69.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Reinsurance Group of vs. Martin Marietta Materials
Performance |
| Timeline |
| Reinsurance Group |
| Martin Marietta Materials |
Reinsurance Group and Martin Marietta Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Reinsurance Group and Martin Marietta
The main advantage of trading using opposite Reinsurance Group and Martin Marietta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reinsurance Group 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.| Reinsurance Group vs. MUENCHRUECKUNSADR 110 | Reinsurance Group vs. Superior Plus Corp | Reinsurance Group vs. NMI Holdings | Reinsurance Group vs. Origin Agritech |
| Martin Marietta vs. SBI Insurance Group | Martin Marietta vs. Ping An Insurance | Martin Marietta vs. ScanSource | Martin Marietta vs. Reinsurance Group of |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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