Correlation Between WD 40 and Martin Marietta

Can any of the company-specific risk be diversified away by investing in both WD 40 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 WD 40 and Martin Marietta into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between WD 40 CO and Martin Marietta Materials, you can compare the effects of market volatilities on WD 40 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 WD 40 with a short position of Martin Marietta. Check out your portfolio center. Please also check ongoing floating volatility patterns of WD 40 and Martin Marietta.

Diversification Opportunities for WD 40 and Martin Marietta

0.83

Correlation Coefficient

WD 40  Martin Marietta

Very poor diversification

The 3 months correlation between WD1 and Martin is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding WD 40 CO 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 WD 40 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 WD 40 CO 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 WD 40 i.e., WD 40 and Martin Marietta go up and down completely randomly.

Pair Corralation between WD 40 and Martin Marietta

Assuming the 90 days trading horizon WD 40 is expected to generate 1.02 times less return on investment than Martin Marietta. In addition to that, WD 40 is 1.34 times more volatile than Martin Marietta Materials. It trades about 0.05 of its total potential returns per unit of risk. Martin Marietta Materials is currently generating about 0.07 per unit of volatility. If you would invest  32,231  in Martin Marietta Materials on October 5, 2024 and sell it today you would earn a total of  18,109  from holding Martin Marietta Materials or generate 56.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.8%
Values	Daily Returns

WD 40 CO  vs.  Martin Marietta Materials

WD 40 CO

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in WD 40 CO are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, WD 40 is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Martin Marietta Materials

Risk-Adjusted Performance

0 of 100

Modest

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 comparatively uncertain basic indicators, Martin Marietta may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with WD 40 and Martin Marietta

The main advantage of trading using opposite WD 40 and Martin Marietta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WD 40 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 WD 40 CO 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.