Correlation Between Martin Marietta and GLOBUS MEDICAL-A

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

Diversification Opportunities for Martin Marietta and GLOBUS MEDICAL-A

0.58

Correlation Coefficient

Martin Marietta  GLOBUS MEDICAL-A

Very weak diversification

The 3 months correlation between Martin and GLOBUS is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Martin Marietta Materials and GLOBUS MEDICAL A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GLOBUS MEDICAL A 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 GLOBUS MEDICAL-A. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GLOBUS MEDICAL A has no effect on the direction of Martin Marietta i.e., Martin Marietta and GLOBUS MEDICAL-A go up and down completely randomly.

Pair Corralation between Martin Marietta and GLOBUS MEDICAL-A

Assuming the 90 days trading horizon Martin Marietta Materials is expected to generate 0.75 times more return on investment than GLOBUS MEDICAL-A. However, Martin Marietta Materials is 1.34 times less risky than GLOBUS MEDICAL-A. It trades about 0.07 of its potential returns per unit of risk. GLOBUS MEDICAL A is currently generating about 0.03 per unit of risk. If you would invest  31,180  in Martin Marietta Materials on October 11, 2024 and sell it today you would earn a total of  18,300  from holding Martin Marietta Materials or generate 58.69% return on investment over 90 days.

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

Martin Marietta Materials  vs.  GLOBUS MEDICAL A

Martin Marietta Materials

Risk-Adjusted Performance

0 of 100

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 comparatively stable basic indicators, Martin Marietta is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

GLOBUS MEDICAL A

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GLOBUS MEDICAL A are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, GLOBUS MEDICAL-A exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Martin Marietta and GLOBUS MEDICAL-A

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

The idea behind Martin Marietta Materials and GLOBUS MEDICAL A 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.