Correlation Between Martin Marietta and Scottish Mortgage

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

Diversification Opportunities for Martin Marietta and Scottish Mortgage

-0.27

Correlation Coefficient

Martin Marietta  Scottish Mortgage

Very good diversification

The 3 months correlation between Martin and Scottish is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Martin Marietta Materials and Scottish Mortgage Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scottish Mortgage 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 Scottish Mortgage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scottish Mortgage has no effect on the direction of Martin Marietta i.e., Martin Marietta and Scottish Mortgage go up and down completely randomly.

Pair Corralation between Martin Marietta and Scottish Mortgage

Assuming the 90 days trading horizon Martin Marietta is expected to generate 17.11 times less return on investment than Scottish Mortgage. In addition to that, Martin Marietta is 1.26 times more volatile than Scottish Mortgage Investment. It trades about 0.01 of its total potential returns per unit of risk. Scottish Mortgage Investment is currently generating about 0.28 per unit of volatility. If you would invest  1,037  in Scottish Mortgage Investment on October 25, 2024 and sell it today you would earn a total of  202.00  from holding Scottish Mortgage Investment or generate 19.48% return on investment over 90 days.

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

Martin Marietta Materials  vs.  Scottish Mortgage Investment

Martin Marietta Materials

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Martin Marietta Materials are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Martin Marietta is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Scottish Mortgage

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Scottish Mortgage Investment are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Scottish Mortgage reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Martin Marietta and Scottish Mortgage

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

The idea behind Martin Marietta Materials and Scottish Mortgage Investment 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.