Correlation Between Webster Financial and Martin Marietta
Can any of the company-specific risk be diversified away by investing in both Webster Financial 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 Webster Financial and Martin Marietta into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Webster Financial and Martin Marietta Materials, you can compare the effects of market volatilities on Webster Financial 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 Webster Financial with a short position of Martin Marietta. Check out your portfolio center. Please also check ongoing floating volatility patterns of Webster Financial and Martin Marietta.
Diversification Opportunities for Webster Financial and Martin Marietta
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Webster and Martin is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Webster Financial 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 Webster Financial 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 Webster Financial 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 Webster Financial i.e., Webster Financial and Martin Marietta go up and down completely randomly.
Pair Corralation between Webster Financial and Martin Marietta
Assuming the 90 days horizon Webster Financial is expected to generate 1.86 times less return on investment than Martin Marietta. In addition to that, Webster Financial is 1.53 times more volatile than Martin Marietta Materials. It trades about 0.02 of its total potential returns per unit of risk. Martin Marietta Materials is currently generating about 0.07 per unit of volatility. If you would invest 32,818 in Martin Marietta Materials on October 30, 2024 and sell it today you would earn a total of 19,182 from holding Martin Marietta Materials or generate 58.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Webster Financial vs. Martin Marietta Materials
Performance |
| Timeline |
| Webster Financial |
| Martin Marietta Materials |
Webster Financial and Martin Marietta Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Webster Financial and Martin Marietta
The main advantage of trading using opposite Webster Financial and Martin Marietta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Webster Financial 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.| Webster Financial vs. SPARTAN STORES | Webster Financial vs. CENTURIA OFFICE REIT | Webster Financial vs. The Home Depot | Webster Financial vs. Geely Automobile Holdings |
| Martin Marietta vs. RELIANCE STEEL AL | Martin Marietta vs. Insteel Industries | Martin Marietta vs. Khiron Life Sciences | Martin Marietta vs. MAANSHAN IRON H |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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