Correlation Between Martin Marietta and Raytheon Technologies

Can any of the company-specific risk be diversified away by investing in both Martin Marietta and Raytheon Technologies 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 Raytheon Technologies 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 Raytheon Technologies, you can compare the effects of market volatilities on Martin Marietta and Raytheon Technologies 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 Raytheon Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Martin Marietta and Raytheon Technologies.

Diversification Opportunities for Martin Marietta and Raytheon Technologies

-0.57

Correlation Coefficient

Martin Marietta  Raytheon Technologies

Excellent diversification

The 3 months correlation between Martin and Raytheon is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Martin Marietta Materials, and Raytheon Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raytheon Technologies 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 Raytheon Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Raytheon Technologies has no effect on the direction of Martin Marietta i.e., Martin Marietta and Raytheon Technologies go up and down completely randomly.

Pair Corralation between Martin Marietta and Raytheon Technologies

Assuming the 90 days trading horizon Martin Marietta Materials, is expected to under-perform the Raytheon Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Martin Marietta Materials, is 11.39 times less risky than Raytheon Technologies. The stock trades about -0.11 of its potential returns per unit of risk. The Raytheon Technologies is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  12,014  in Raytheon Technologies on December 26, 2024 and sell it today you would earn a total of  869.00  from holding Raytheon Technologies or generate 7.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

Martin Marietta Materials,  vs.  Raytheon Technologies

Martin Marietta Mate

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. 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.

Raytheon Technologies

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Raytheon Technologies are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Raytheon Technologies may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Martin Marietta and Raytheon Technologies

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

The idea behind Martin Marietta Materials, and Raytheon Technologies 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.