Correlation Between Martin Marietta and Kimberly Clark

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

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

Diversification Opportunities for Martin Marietta and Kimberly Clark

0.68

Correlation Coefficient

Martin Marietta  Kimberly Clark

Poor diversification

The 3 months correlation between Martin and Kimberly is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Martin Marietta Materials, and Kimberly Clark in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kimberly Clark and Martin Marietta 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 Martin Marietta Materials, are associated (or correlated) with Kimberly Clark. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kimberly Clark has no effect on the direction of Martin Marietta i.e., Martin Marietta and Kimberly Clark go up and down completely randomly.

Pair Corralation between Martin Marietta and Kimberly Clark

Assuming the 90 days trading horizon Martin Marietta is expected to generate 1.59 times less return on investment than Kimberly Clark. In addition to that, Martin Marietta is 1.32 times more volatile than Kimberly Clark. It trades about 0.04 of its total potential returns per unit of risk. Kimberly Clark is currently generating about 0.09 per unit of volatility. If you would invest  58,721  in Kimberly Clark on October 9, 2024 and sell it today you would earn a total of  18,399  from holding Kimberly Clark or generate 31.33% return on investment over 90 days.

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

Martin Marietta Materials,  vs.  Kimberly Clark

Martin Marietta Mate

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Martin Marietta Materials, are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong essential indicators, Martin Marietta is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Kimberly Clark

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kimberly Clark are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, Kimberly Clark is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Martin Marietta and Kimberly Clark

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

The idea behind Martin Marietta Materials, and Kimberly Clark 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..