Correlation Between CRH PLC and Martin Marietta

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

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

Diversification Opportunities for CRH PLC and Martin Marietta

0.05

Correlation Coefficient

CRH PLC  Martin Marietta

Significant diversification

The 3 months correlation between CRH and Martin is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding CRH PLC ADR 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 CRH PLC 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 CRH PLC ADR 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 CRH PLC i.e., CRH PLC and Martin Marietta go up and down completely randomly.

Pair Corralation between CRH PLC and Martin Marietta

Considering the 90-day investment horizon CRH PLC ADR is expected to generate 1.4 times more return on investment than Martin Marietta. However, CRH PLC is 1.4 times more volatile than Martin Marietta Materials. It trades about 0.05 of its potential returns per unit of risk. Martin Marietta Materials is currently generating about -0.09 per unit of risk. If you would invest  9,358  in CRH PLC ADR on December 27, 2024 and sell it today you would earn a total of  503.00  from holding CRH PLC ADR or generate 5.38% return on investment over 90 days.

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

CRH PLC ADR  vs.  Martin Marietta Materials

CRH PLC ADR

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CRH PLC ADR are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, CRH PLC may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Martin Marietta Materials

Risk-Adjusted Performance

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 latest inconsistent performance, the Stock's essential indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with CRH PLC and Martin Marietta

The main advantage of trading using opposite CRH PLC and Martin Marietta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CRH PLC 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 CRH PLC ADR 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.