Correlation Between Martin Marietta and VOLKSWAGEN

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

Diversification Opportunities for Martin Marietta and VOLKSWAGEN

-0.81

Correlation Coefficient

Martin Marietta  VOLKSWAGEN

Pay attention - limited upside

The 3 months correlation between Martin and VOLKSWAGEN is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Martin Marietta Materials and VOLKSWAGEN AG VZ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VOLKSWAGEN AG VZ 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 VOLKSWAGEN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VOLKSWAGEN AG VZ has no effect on the direction of Martin Marietta i.e., Martin Marietta and VOLKSWAGEN go up and down completely randomly.

Pair Corralation between Martin Marietta and VOLKSWAGEN

Assuming the 90 days trading horizon Martin Marietta Materials is expected to under-perform the VOLKSWAGEN. But the stock apears to be less risky and, when comparing its historical volatility, Martin Marietta Materials is 1.41 times less risky than VOLKSWAGEN. The stock trades about -0.15 of its potential returns per unit of risk. The VOLKSWAGEN AG VZ is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  870.00  in VOLKSWAGEN AG VZ on December 24, 2024 and sell it today you would earn a total of  150.00  from holding VOLKSWAGEN AG VZ or generate 17.24% return on investment over 90 days.

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

Martin Marietta Materials  vs.  VOLKSWAGEN AG VZ

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 fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

VOLKSWAGEN AG VZ

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VOLKSWAGEN AG VZ are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, VOLKSWAGEN reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Martin Marietta and VOLKSWAGEN

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

The idea behind Martin Marietta Materials and VOLKSWAGEN AG VZ 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.