Correlation Between Martin Marietta and Morgan Advanced

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

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

Diversification Opportunities for Martin Marietta and Morgan Advanced

-0.73

Correlation Coefficient

Martin Marietta  Morgan Advanced

Pay attention - limited upside

The 3 months correlation between Martin and Morgan is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Martin Marietta Materials and Morgan Advanced Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Advanced Materials and Martin Marietta 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 Martin Marietta Materials are associated (or correlated) with Morgan Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Morgan Advanced Materials has no effect on the direction of Martin Marietta i.e., Martin Marietta and Morgan Advanced go up and down completely randomly.

Pair Corralation between Martin Marietta and Morgan Advanced

Assuming the 90 days trading horizon Martin Marietta is expected to generate 3.85 times less return on investment than Morgan Advanced. In addition to that, Martin Marietta is 1.65 times more volatile than Morgan Advanced Materials. It trades about 0.06 of its total potential returns per unit of risk. Morgan Advanced Materials is currently generating about 0.38 per unit of volatility. If you would invest  24,200  in Morgan Advanced Materials on September 2, 2024 and sell it today you would earn a total of  2,350  from holding Morgan Advanced Materials or generate 9.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Martin Marietta Materials  vs.  Morgan Advanced Materials

Martin Marietta Materials

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Martin Marietta Materials are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Martin Marietta unveiled solid returns over the last few months and may actually be approaching a breakup point.

Morgan Advanced Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Morgan Advanced Materials 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 stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Martin Marietta and Morgan Advanced

The main advantage of trading using opposite Martin Marietta and Morgan Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Martin Marietta position performs unexpectedly, Morgan Advanced 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 Morgan Advanced will offset losses from the drop in Morgan Advanced's long position.

The idea behind Martin Marietta Materials and Morgan Advanced 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.