Correlation Between United Natural and Martin Marietta

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

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

Diversification Opportunities for United Natural and Martin Marietta

-0.48

Correlation Coefficient

United Natural  Martin Marietta

Very good diversification

The 3 months correlation between United and Martin is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding United Natural Foods 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 Natural 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 Natural Foods 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 United Natural i.e., United Natural and Martin Marietta go up and down completely randomly.

Pair Corralation between United Natural and Martin Marietta

Assuming the 90 days horizon United Natural Foods is expected to generate 2.21 times more return on investment than Martin Marietta. However, United Natural is 2.21 times more volatile than Martin Marietta Materials. It trades about 0.29 of its potential returns per unit of risk. Martin Marietta Materials is currently generating about 0.14 per unit of risk. If you would invest  2,429  in United Natural Foods on October 24, 2024 and sell it today you would earn a total of  286.00  from holding United Natural Foods or generate 11.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	94.44%
Values	Daily Returns

United Natural Foods  vs.  Martin Marietta Materials

United Natural Foods

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in United Natural Foods are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, United Natural reported solid returns over the last few months and may actually be approaching a breakup point.

Martin Marietta Materials

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Martin Marietta Materials are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Martin Marietta is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with United Natural and Martin Marietta

The main advantage of trading using opposite United Natural and Martin Marietta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Natural 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 United Natural Foods 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .