Correlation Between United Fire and MARTIN

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

By analyzing existing cross correlation between United Fire Group and MARTIN MARIETTA MATERIALS, you can compare the effects of market volatilities on United Fire 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 United Fire with a short position of MARTIN. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Fire and MARTIN.

Diversification Opportunities for United Fire and MARTIN

-0.35

Correlation Coefficient

United Fire  MARTIN

Very good diversification

The 3 months correlation between United and MARTIN is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding United Fire Group 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 United Fire 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 United Fire Group 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 MATERIALS has no effect on the direction of United Fire i.e., United Fire and MARTIN go up and down completely randomly.

Pair Corralation between United Fire and MARTIN

Given the investment horizon of 90 days United Fire Group is expected to generate 3.91 times more return on investment than MARTIN. However, United Fire is 3.91 times more volatile than MARTIN MARIETTA MATERIALS. It trades about 0.02 of its potential returns per unit of risk. MARTIN MARIETTA MATERIALS is currently generating about 0.0 per unit of risk. If you would invest  2,603  in United Fire Group on September 25, 2024 and sell it today you would earn a total of  283.00  from holding United Fire Group or generate 10.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.54%
Values	Daily Returns

United Fire Group  vs.  MARTIN MARIETTA MATERIALS

United Fire Group

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in United Fire Group are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental indicators, United Fire unveiled solid returns over the last few months and may actually be approaching a breakup point.

MARTIN MARIETTA MATERIALS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MARTIN MARIETTA MATERIALS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for MARTIN MARIETTA MATERIALS investors.

Pair Trading with United Fire and MARTIN

The main advantage of trading using opposite United Fire and MARTIN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Fire 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 United Fire Group 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.