Correlation Between CVR Energy and Martin Marietta

Can any of the company-specific risk be diversified away by investing in both CVR Energy 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 CVR Energy and Martin Marietta into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CVR Energy and Martin Marietta Materials, you can compare the effects of market volatilities on CVR Energy 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 CVR Energy with a short position of Martin Marietta. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVR Energy and Martin Marietta.

Diversification Opportunities for CVR Energy and Martin Marietta

-0.72

Correlation Coefficient

CVR Energy  Martin Marietta

Pay attention - limited upside

The 3 months correlation between CVR and Martin is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding CVR Energy 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 CVR Energy 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 CVR Energy 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 CVR Energy i.e., CVR Energy and Martin Marietta go up and down completely randomly.

Pair Corralation between CVR Energy and Martin Marietta

Assuming the 90 days trading horizon CVR Energy is expected to under-perform the Martin Marietta. In addition to that, CVR Energy is 2.72 times more volatile than Martin Marietta Materials. It trades about -0.06 of its total potential returns per unit of risk. Martin Marietta Materials is currently generating about 0.13 per unit of volatility. If you would invest  52,439  in Martin Marietta Materials on August 31, 2024 and sell it today you would earn a total of  7,077  from holding Martin Marietta Materials or generate 13.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

CVR Energy  vs.  Martin Marietta Materials

CVR Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CVR Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Martin Marietta Materials

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Martin Marietta Materials are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Martin Marietta unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CVR Energy and Martin Marietta

The main advantage of trading using opposite CVR Energy and Martin Marietta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVR Energy 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.

The idea behind CVR Energy and Martin Marietta Materials pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.