Correlation Between ASPEN TECHINC and Martin Marietta

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

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

Diversification Opportunities for ASPEN TECHINC and Martin Marietta

-0.26

Correlation Coefficient

ASPEN TECHINC  Martin Marietta

Very good diversification

The 3 months correlation between ASPEN and Martin is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding ASPEN TECHINC DL 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 ASPEN TECHINC 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 ASPEN TECHINC DL 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 ASPEN TECHINC i.e., ASPEN TECHINC and Martin Marietta go up and down completely randomly.

Pair Corralation between ASPEN TECHINC and Martin Marietta

Assuming the 90 days horizon ASPEN TECHINC is expected to generate 1.19 times less return on investment than Martin Marietta. But when comparing it to its historical volatility, ASPEN TECHINC DL is 2.17 times less risky than Martin Marietta. It trades about 0.25 of its potential returns per unit of risk. Martin Marietta Materials is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  51,040  in Martin Marietta Materials on October 25, 2024 and sell it today you would earn a total of  1,580  from holding Martin Marietta Materials or generate 3.1% return on investment over 90 days.

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

ASPEN TECHINC DL  vs.  Martin Marietta Materials

ASPEN TECHINC DL

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ASPEN TECHINC DL are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ASPEN TECHINC 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. In spite of comparatively stable basic indicators, Martin Marietta is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with ASPEN TECHINC and Martin Marietta

The main advantage of trading using opposite ASPEN TECHINC and Martin Marietta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASPEN TECHINC 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 ASPEN TECHINC DL 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.