Correlation Between Chemours and MARTIN

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

By analyzing existing cross correlation between Chemours Co and MARTIN MARIETTA MATLS, you can compare the effects of market volatilities on Chemours and MARTIN 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 Chemours with a short position of MARTIN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chemours and MARTIN.

Diversification Opportunities for Chemours and MARTIN

-0.01

Correlation Coefficient

Chemours  MARTIN

Good diversification

The 3 months correlation between Chemours and MARTIN is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Chemours Co and MARTIN MARIETTA MATLS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MARTIN MARIETTA MATLS and Chemours 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 Chemours Co are associated (or correlated) with MARTIN. 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 MATLS has no effect on the direction of Chemours i.e., Chemours and MARTIN go up and down completely randomly.

Pair Corralation between Chemours and MARTIN

Allowing for the 90-day total investment horizon Chemours Co is expected to under-perform the MARTIN. But the stock apears to be less risky and, when comparing its historical volatility, Chemours Co is 29.18 times less risky than MARTIN. The stock trades about -0.02 of its potential returns per unit of risk. The MARTIN MARIETTA MATLS is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  8,670  in MARTIN MARIETTA MATLS on October 12, 2024 and sell it today you would lose (377.00) from holding MARTIN MARIETTA MATLS or give up 4.35% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	42.22%
Values	Daily Returns

Chemours Co  vs.  MARTIN MARIETTA MATLS

Chemours

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chemours Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

MARTIN MARIETTA MATLS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MARTIN MARIETTA MATLS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, MARTIN is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Chemours and MARTIN

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

The idea behind Chemours Co and MARTIN MARIETTA MATLS 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .