Correlation Between JDS UNIPHASE and Martin Marietta
Can any of the company-specific risk be diversified away by investing in both JDS UNIPHASE 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 JDS UNIPHASE and Martin Marietta into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JDS UNIPHASE and Martin Marietta Materials, you can compare the effects of market volatilities on JDS UNIPHASE 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 JDS UNIPHASE with a short position of Martin Marietta. Check out your portfolio center. Please also check ongoing floating volatility patterns of JDS UNIPHASE and Martin Marietta.
Diversification Opportunities for JDS UNIPHASE and Martin Marietta
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between JDS and Martin is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding JDS UNIPHASE 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 JDS UNIPHASE 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 JDS UNIPHASE 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 JDS UNIPHASE i.e., JDS UNIPHASE and Martin Marietta go up and down completely randomly.
Pair Corralation between JDS UNIPHASE and Martin Marietta
Assuming the 90 days trading horizon JDS UNIPHASE is expected to generate 1.33 times less return on investment than Martin Marietta. In addition to that, JDS UNIPHASE is 1.45 times more volatile than Martin Marietta Materials. It trades about 0.09 of its total potential returns per unit of risk. Martin Marietta Materials is currently generating about 0.18 per unit of volatility. If you would invest 53,380 in Martin Marietta Materials on September 4, 2024 and sell it today you would earn a total of 3,160 from holding Martin Marietta Materials or generate 5.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
JDS UNIPHASE vs. Martin Marietta Materials
Performance |
| Timeline |
| JDS UNIPHASE |
| Martin Marietta Materials |
JDS UNIPHASE and Martin Marietta Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JDS UNIPHASE and Martin Marietta
The main advantage of trading using opposite JDS UNIPHASE and Martin Marietta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JDS UNIPHASE 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.| JDS UNIPHASE vs. Martin Marietta Materials | JDS UNIPHASE vs. Computer And Technologies | JDS UNIPHASE vs. Japan Tobacco | JDS UNIPHASE vs. Plastic Omnium |
| Martin Marietta vs. Apple Inc | Martin Marietta vs. Apple Inc | Martin Marietta vs. Apple Inc | Martin Marietta vs. Apple Inc |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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