Correlation Between Heavitree Brewery and Martin Marietta

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

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

Diversification Opportunities for Heavitree Brewery and Martin Marietta

-0.04

Correlation Coefficient

Heavitree Brewery  Martin Marietta

Good diversification

The 3 months correlation between Heavitree and Martin is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Heavitree Brewery 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 Heavitree Brewery 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 Heavitree Brewery 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 Heavitree Brewery i.e., Heavitree Brewery and Martin Marietta go up and down completely randomly.

Pair Corralation between Heavitree Brewery and Martin Marietta

Assuming the 90 days trading horizon Heavitree Brewery is expected to generate 0.24 times more return on investment than Martin Marietta. However, Heavitree Brewery is 4.1 times less risky than Martin Marietta. It trades about -0.13 of its potential returns per unit of risk. Martin Marietta Materials is currently generating about -0.05 per unit of risk. If you would invest  29,000  in Heavitree Brewery on October 11, 2024 and sell it today you would lose (1,000.00) from holding Heavitree Brewery or give up 3.45% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.08%
Values	Daily Returns

Heavitree Brewery  vs.  Martin Marietta Materials

Heavitree Brewery

Risk-Adjusted Performance

0 of 100

Very Weak

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

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.

Pair Trading with Heavitree Brewery and Martin Marietta

The main advantage of trading using opposite Heavitree Brewery and Martin Marietta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heavitree Brewery 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 Heavitree Brewery 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.