Correlation Between Select Sector and Martin Marietta
Can any of the company-specific risk be diversified away by investing in both Select Sector 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 Select Sector and Martin Marietta into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Select Sector and Martin Marietta Materials, you can compare the effects of market volatilities on Select Sector 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 Select Sector with a short position of Martin Marietta. Check out your portfolio center. Please also check ongoing floating volatility patterns of Select Sector and Martin Marietta.
Diversification Opportunities for Select Sector and Martin Marietta
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Select and Martin is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding The Select Sector 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 Select Sector 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 The Select Sector 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 Select Sector i.e., Select Sector and Martin Marietta go up and down completely randomly.
Pair Corralation between Select Sector and Martin Marietta
Assuming the 90 days trading horizon The Select Sector is expected to generate 1.0 times more return on investment than Martin Marietta. However, The Select Sector is 1.0 times less risky than Martin Marietta. It trades about 0.19 of its potential returns per unit of risk. Martin Marietta Materials is currently generating about 0.18 per unit of risk. If you would invest 159,394 in The Select Sector on August 29, 2024 and sell it today you would earn a total of 11,258 from holding The Select Sector or generate 7.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Select Sector vs. Martin Marietta Materials
Performance |
| Timeline |
| Select Sector |
| Martin Marietta Materials |
Select Sector and Martin Marietta Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Select Sector and Martin Marietta
The main advantage of trading using opposite Select Sector and Martin Marietta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Select Sector 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.| Select Sector vs. The Select Sector | Select Sector vs. The Select Sector | Select Sector vs. The Select Sector | Select Sector vs. The Select Sector |
| Martin Marietta vs. Grupo Cementos de | Martin Marietta vs. The Select Sector | Martin Marietta vs. Promotora y Operadora | Martin Marietta vs. iShares Global Timber |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
Other Complementary Tools
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal |