Correlation Between Martin Marietta and Arrow Electronics

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Martin Marietta and Arrow Electronics 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 Arrow Electronics 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 Arrow Electronics, you can compare the effects of market volatilities on Martin Marietta and Arrow Electronics 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 Arrow Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Martin Marietta and Arrow Electronics.

Diversification Opportunities for Martin Marietta and Arrow Electronics

-0.33
  Correlation Coefficient

Very good diversification

The 3 months correlation between Martin and Arrow is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Martin Marietta Materials and Arrow Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrow Electronics 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 Arrow Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arrow Electronics has no effect on the direction of Martin Marietta i.e., Martin Marietta and Arrow Electronics go up and down completely randomly.

Pair Corralation between Martin Marietta and Arrow Electronics

Assuming the 90 days trading horizon Martin Marietta Materials is expected to generate 0.9 times more return on investment than Arrow Electronics. However, Martin Marietta Materials is 1.11 times less risky than Arrow Electronics. It trades about 0.07 of its potential returns per unit of risk. Arrow Electronics is currently generating about 0.01 per unit of risk. If you would invest  31,239  in Martin Marietta Materials on October 10, 2024 and sell it today you would earn a total of  17,761  from holding Martin Marietta Materials or generate 56.86% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Martin Marietta Materials  vs.  Arrow Electronics

 Performance 
       Timeline  
Martin Marietta Materials 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
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.
Arrow Electronics 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Arrow Electronics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Martin Marietta and Arrow Electronics Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Martin Marietta and Arrow Electronics

The main advantage of trading using opposite Martin Marietta and Arrow Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Martin Marietta position performs unexpectedly, Arrow Electronics 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 Arrow Electronics will offset losses from the drop in Arrow Electronics' long position.
The idea behind Martin Marietta Materials and Arrow Electronics 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.
Check out your portfolio center.
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.

Other Complementary Tools

Money Flow Index
Determine momentum by analyzing Money Flow Index and other technical indicators
Bond Analysis
Evaluate and analyze corporate bonds as a potential investment for your portfolios.
ETFs
Find actively traded Exchange Traded Funds (ETF) from around the world
USA ETFs
Find actively traded Exchange Traded Funds (ETF) in USA
Content Syndication
Quickly integrate customizable finance content to your own investment portal