Correlation Between Check Point and Martin Marietta

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

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

Diversification Opportunities for Check Point and Martin Marietta

-0.55

Correlation Coefficient

Check Point  Martin Marietta

Excellent diversification

The 3 months correlation between Check and Martin is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Check Point Software 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 Check Point 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 Check Point Software 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 Check Point i.e., Check Point and Martin Marietta go up and down completely randomly.

Pair Corralation between Check Point and Martin Marietta

Assuming the 90 days trading horizon Check Point Software is expected to under-perform the Martin Marietta. In addition to that, Check Point is 1.36 times more volatile than Martin Marietta Materials. It trades about -0.01 of its total potential returns per unit of risk. Martin Marietta Materials is currently generating about 0.05 per unit of volatility. If you would invest  52,758  in Martin Marietta Materials on September 15, 2024 and sell it today you would earn a total of  2,156  from holding Martin Marietta Materials or generate 4.09% return on investment over 90 days.

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

Check Point Software  vs.  Martin Marietta Materials

Check Point Software

Risk-Adjusted Performance

0 of 100

Very Weak

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

Martin Marietta Materials

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Martin Marietta Materials are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Martin Marietta is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Check Point and Martin Marietta

The main advantage of trading using opposite Check Point and Martin Marietta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Check Point 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 Check Point Software 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.