Correlation Between Park Ohio and MARTIN

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Can any of the company-specific risk be diversified away by investing in both Park Ohio and MARTIN 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 Park Ohio and MARTIN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Park Ohio Holdings and MARTIN MARIETTA MATLS, you can compare the effects of market volatilities on Park Ohio and MARTIN 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 Park Ohio with a short position of MARTIN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Park Ohio and MARTIN.

Diversification Opportunities for Park Ohio and MARTIN

0.13
  Correlation Coefficient

Average diversification

The 3 months correlation between Park and MARTIN is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Park Ohio Holdings and MARTIN MARIETTA MATLS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MARTIN MARIETTA MATLS and Park Ohio 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 Park Ohio Holdings are associated (or correlated) with MARTIN. 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 MATLS has no effect on the direction of Park Ohio i.e., Park Ohio and MARTIN go up and down completely randomly.

Pair Corralation between Park Ohio and MARTIN

Given the investment horizon of 90 days Park Ohio Holdings is expected to under-perform the MARTIN. In addition to that, Park Ohio is 4.47 times more volatile than MARTIN MARIETTA MATLS. It trades about -0.57 of its total potential returns per unit of risk. MARTIN MARIETTA MATLS is currently generating about -0.3 per unit of volatility. If you would invest  9,726  in MARTIN MARIETTA MATLS on September 30, 2024 and sell it today you would lose (179.00) from holding MARTIN MARIETTA MATLS or give up 1.84% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy71.43%
ValuesDaily Returns

Park Ohio Holdings  vs.  MARTIN MARIETTA MATLS

 Performance 
       Timeline  
Park Ohio Holdings 

Risk-Adjusted Performance

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Strong
Very Weak
Over the last 90 days Park Ohio Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.
MARTIN MARIETTA MATLS 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days MARTIN MARIETTA MATLS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, MARTIN is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Park Ohio and MARTIN Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Park Ohio and MARTIN

The main advantage of trading using opposite Park Ohio and MARTIN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Park Ohio position performs unexpectedly, MARTIN 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 will offset losses from the drop in MARTIN's long position.
The idea behind Park Ohio Holdings and MARTIN MARIETTA MATLS 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.

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