Correlation Between Martin Marietta and Grupo Financiero

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

Diversification Opportunities for Martin Marietta and Grupo Financiero

-0.16

Correlation Coefficient

Martin Marietta  Grupo Financiero

Good diversification

The 3 months correlation between Martin and Grupo is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Martin Marietta Materials and Grupo Financiero Banorte in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Financiero Banorte 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 Grupo Financiero. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Financiero Banorte has no effect on the direction of Martin Marietta i.e., Martin Marietta and Grupo Financiero go up and down completely randomly.

Pair Corralation between Martin Marietta and Grupo Financiero

Assuming the 90 days trading horizon Martin Marietta Materials is expected to under-perform the Grupo Financiero. In addition to that, Martin Marietta is 1.25 times more volatile than Grupo Financiero Banorte. It trades about -0.11 of its total potential returns per unit of risk. Grupo Financiero Banorte is currently generating about 0.09 per unit of volatility. If you would invest  13,681  in Grupo Financiero Banorte on December 25, 2024 and sell it today you would earn a total of  1,095  from holding Grupo Financiero Banorte or generate 8.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Martin Marietta Materials  vs.  Grupo Financiero Banorte

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 weak performance in the last few months, the Stock's primary indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Grupo Financiero Banorte

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Financiero Banorte are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Grupo Financiero may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Martin Marietta and Grupo Financiero

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

The idea behind Martin Marietta Materials and Grupo Financiero Banorte 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.