Correlation Between RELIANCE STEEL and Martin Marietta
Can any of the company-specific risk be diversified away by investing in both RELIANCE STEEL 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 RELIANCE STEEL and Martin Marietta into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RELIANCE STEEL AL and Martin Marietta Materials, you can compare the effects of market volatilities on RELIANCE STEEL 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 RELIANCE STEEL with a short position of Martin Marietta. Check out your portfolio center. Please also check ongoing floating volatility patterns of RELIANCE STEEL and Martin Marietta.
Diversification Opportunities for RELIANCE STEEL and Martin Marietta
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between RELIANCE and Martin is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding RELIANCE STEEL AL 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 RELIANCE STEEL 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 RELIANCE STEEL AL 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 RELIANCE STEEL i.e., RELIANCE STEEL and Martin Marietta go up and down completely randomly.
Pair Corralation between RELIANCE STEEL and Martin Marietta
Assuming the 90 days trading horizon RELIANCE STEEL is expected to generate 1.21 times less return on investment than Martin Marietta. In addition to that, RELIANCE STEEL is 1.15 times more volatile than Martin Marietta Materials. It trades about 0.17 of its total potential returns per unit of risk. Martin Marietta Materials is currently generating about 0.23 per unit of volatility. If you would invest 50,160 in Martin Marietta Materials on November 7, 2024 and sell it today you would earn a total of 2,440 from holding Martin Marietta Materials or generate 4.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
RELIANCE STEEL AL vs. Martin Marietta Materials
Performance |
| Timeline |
| RELIANCE STEEL AL |
| Martin Marietta Materials |
RELIANCE STEEL and Martin Marietta Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RELIANCE STEEL and Martin Marietta
The main advantage of trading using opposite RELIANCE STEEL and Martin Marietta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RELIANCE STEEL 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.| RELIANCE STEEL vs. G III APPAREL GROUP | RELIANCE STEEL vs. CALTAGIRONE EDITORE | RELIANCE STEEL vs. PT Steel Pipe | RELIANCE STEEL vs. PennantPark Investment |
| Martin Marietta vs. HYATT HOTELS A | Martin Marietta vs. MCEWEN MINING INC | Martin Marietta vs. Sunstone Hotel Investors | Martin Marietta vs. Calibre Mining Corp |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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