Correlation Between Mitsubishi Materials and Martin Marietta

Can any of the company-specific risk be diversified away by investing in both Mitsubishi Materials and Martin Marietta 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 Mitsubishi Materials and Martin Marietta into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mitsubishi Materials and Martin Marietta Materials, you can compare the effects of market volatilities on Mitsubishi Materials and Martin Marietta 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 Mitsubishi Materials with a short position of Martin Marietta. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitsubishi Materials and Martin Marietta.

Diversification Opportunities for Mitsubishi Materials and Martin Marietta

-0.5

Correlation Coefficient

Mitsubishi Materials  Martin Marietta

Very good diversification

The 3 months correlation between Mitsubishi and Martin is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Mitsubishi Materials and Martin Marietta Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Martin Marietta Materials and Mitsubishi Materials 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 Mitsubishi Materials are associated (or correlated) with Martin Marietta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Martin Marietta Materials has no effect on the direction of Mitsubishi Materials i.e., Mitsubishi Materials and Martin Marietta go up and down completely randomly.

Pair Corralation between Mitsubishi Materials and Martin Marietta

Assuming the 90 days trading horizon Mitsubishi Materials is expected to generate 0.95 times more return on investment than Martin Marietta. However, Mitsubishi Materials is 1.05 times less risky than Martin Marietta. It trades about 0.1 of its potential returns per unit of risk. Martin Marietta Materials is currently generating about -0.15 per unit of risk. If you would invest  1,480  in Mitsubishi Materials on December 24, 2024 and sell it today you would earn a total of  120.00  from holding Mitsubishi Materials or generate 8.11% return on investment over 90 days.

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

Mitsubishi Materials  vs.  Martin Marietta Materials

Mitsubishi Materials

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mitsubishi Materials are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile forward-looking indicators, Mitsubishi Materials may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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.

Pair Trading with Mitsubishi Materials and Martin Marietta

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

The idea behind Mitsubishi Materials and Martin Marietta Materials 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.