Correlation Between THORNEY TECHS and Martin Marietta
Can any of the company-specific risk be diversified away by investing in both THORNEY TECHS 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 THORNEY TECHS and Martin Marietta into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between THORNEY TECHS LTD and Martin Marietta Materials, you can compare the effects of market volatilities on THORNEY TECHS 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 THORNEY TECHS with a short position of Martin Marietta. Check out your portfolio center. Please also check ongoing floating volatility patterns of THORNEY TECHS and Martin Marietta.
Diversification Opportunities for THORNEY TECHS and Martin Marietta
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between THORNEY and Martin is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding THORNEY TECHS LTD 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 THORNEY TECHS 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 THORNEY TECHS LTD 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 THORNEY TECHS i.e., THORNEY TECHS and Martin Marietta go up and down completely randomly.
Pair Corralation between THORNEY TECHS and Martin Marietta
Assuming the 90 days horizon THORNEY TECHS LTD is expected to generate 3.49 times more return on investment than Martin Marietta. However, THORNEY TECHS is 3.49 times more volatile than Martin Marietta Materials. It trades about 0.02 of its potential returns per unit of risk. Martin Marietta Materials is currently generating about 0.04 per unit of risk. If you would invest 8.15 in THORNEY TECHS LTD on October 29, 2024 and sell it today you would lose (0.85) from holding THORNEY TECHS LTD or give up 10.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
THORNEY TECHS LTD vs. Martin Marietta Materials
Performance |
| Timeline |
| THORNEY TECHS LTD |
| Martin Marietta Materials |
THORNEY TECHS and Martin Marietta Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with THORNEY TECHS and Martin Marietta
The main advantage of trading using opposite THORNEY TECHS and Martin Marietta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if THORNEY TECHS 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.| THORNEY TECHS vs. Tower One Wireless | THORNEY TECHS vs. Coffee Holding Co | THORNEY TECHS vs. Algonquin Power Utilities | THORNEY TECHS vs. Darden Restaurants |
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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