Correlation Between Grupo Financiero and Martin Marietta

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

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

Diversification Opportunities for Grupo Financiero and Martin Marietta

-0.17

Correlation Coefficient

Grupo Financiero  Martin Marietta

Good diversification

The 3 months correlation between Grupo and Martin is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Financiero Banorte 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 Grupo Financiero 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 Grupo Financiero Banorte 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 Grupo Financiero i.e., Grupo Financiero and Martin Marietta go up and down completely randomly.

Pair Corralation between Grupo Financiero and Martin Marietta

Assuming the 90 days trading horizon Grupo Financiero Banorte is expected to under-perform the Martin Marietta. In addition to that, Grupo Financiero is 1.11 times more volatile than Martin Marietta Materials. It trades about 0.0 of its total potential returns per unit of risk. Martin Marietta Materials is currently generating about 0.14 per unit of volatility. If you would invest  1,017,723  in Martin Marietta Materials on September 13, 2024 and sell it today you would earn a total of  162,111  from holding Martin Marietta Materials or generate 15.93% return on investment over 90 days.

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

Grupo Financiero Banorte  vs.  Martin Marietta Materials

Grupo Financiero Banorte

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grupo Financiero Banorte has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Grupo Financiero is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Martin Marietta Materials

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Martin Marietta Materials are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating primary indicators, Martin Marietta showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Grupo Financiero and Martin Marietta

The main advantage of trading using opposite Grupo Financiero and Martin Marietta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Financiero 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 Grupo Financiero Banorte 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.