Correlation Between Martin Marietta and Bath Body

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

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

Diversification Opportunities for Martin Marietta and Bath Body

-0.44

Correlation Coefficient

Martin Marietta  Bath Body

Very good diversification

The 3 months correlation between Martin and Bath is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Martin Marietta Materials and Bath Body Works in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bath Body Works and Martin Marietta 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 Martin Marietta Materials are associated (or correlated) with Bath Body. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bath Body Works has no effect on the direction of Martin Marietta i.e., Martin Marietta and Bath Body go up and down completely randomly.

Pair Corralation between Martin Marietta and Bath Body

Assuming the 90 days trading horizon Martin Marietta Materials is expected to generate 0.61 times more return on investment than Bath Body. However, Martin Marietta Materials is 1.63 times less risky than Bath Body. It trades about 0.07 of its potential returns per unit of risk. Bath Body Works is currently generating about 0.0 per unit of risk. If you would invest  35,233  in Martin Marietta Materials on October 27, 2024 and sell it today you would earn a total of  19,794  from holding Martin Marietta Materials or generate 56.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	93.48%
Values	Daily Returns

Martin Marietta Materials  vs.  Bath Body Works

Martin Marietta Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Martin Marietta Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Martin Marietta is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Bath Body Works

Risk-Adjusted Performance

10 of 100

OK

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

Pair Trading with Martin Marietta and Bath Body

The main advantage of trading using opposite Martin Marietta and Bath Body positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Martin Marietta position performs unexpectedly, Bath Body 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 Bath Body will offset losses from the drop in Bath Body's long position.

The idea behind Martin Marietta Materials and Bath Body Works 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.

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 Commodity Directory module to find actively traded commodities issued by global exchanges.