Correlation Between Martin Marietta and Boise Cascad

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

Diversification Opportunities for Martin Marietta and Boise Cascad

0.68

Correlation Coefficient

Martin Marietta  Boise Cascad

Poor diversification

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

Pair Corralation between Martin Marietta and Boise Cascad

Considering the 90-day investment horizon Martin Marietta Materials is expected to generate 0.61 times more return on investment than Boise Cascad. However, Martin Marietta Materials is 1.64 times less risky than Boise Cascad. It trades about -0.62 of its potential returns per unit of risk. Boise Cascad Llc is currently generating about -0.64 per unit of risk. If you would invest  57,470  in Martin Marietta Materials on October 10, 2024 and sell it today you would lose (6,605) from holding Martin Marietta Materials or give up 11.49% of portfolio value over 90 days.

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

Martin Marietta Materials  vs.  Boise Cascad Llc

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 very healthy essential indicators, Martin Marietta is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Boise Cascad Llc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Boise Cascad Llc 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 fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Martin Marietta and Boise Cascad

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

The idea behind Martin Marietta Materials and Boise Cascad Llc 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.