Correlation Between United States and MARTIN

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

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

Diversification Opportunities for United States and MARTIN

0.39

Correlation Coefficient

United States  MARTIN

Weak diversification

The 3 months correlation between United and MARTIN is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel 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 United States 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 States Steel 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 United States i.e., United States and MARTIN go up and down completely randomly.

Pair Corralation between United States and MARTIN

Taking into account the 90-day investment horizon United States Steel is expected to under-perform the MARTIN. In addition to that, United States is 8.54 times more volatile than MARTIN MARIETTA MATLS. It trades about -0.11 of its total potential returns per unit of risk. MARTIN MARIETTA MATLS is currently generating about -0.17 per unit of volatility. If you would invest  9,727  in MARTIN MARIETTA MATLS on September 27, 2024 and sell it today you would lose (180.00) from holding MARTIN MARIETTA MATLS or give up 1.85% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	65.12%
Values	Daily Returns

United States Steel  vs.  MARTIN MARIETTA MATLS

United States Steel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days United States Steel has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

MARTIN MARIETTA MATLS

Risk-Adjusted Performance

0 of 100

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.

Pair Trading with United States and MARTIN

The main advantage of trading using opposite United States and MARTIN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United States 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 States Steel 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.