Correlation Between Martin Marietta and Naked Wines

Can any of the company-specific risk be diversified away by investing in both Martin Marietta and Naked Wines 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 Naked Wines 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 Naked Wines plc, you can compare the effects of market volatilities on Martin Marietta and Naked Wines 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 Naked Wines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Martin Marietta and Naked Wines.

Diversification Opportunities for Martin Marietta and Naked Wines

-0.03

Correlation Coefficient

Martin Marietta  Naked Wines

Good diversification

The 3 months correlation between Martin and Naked is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Martin Marietta Materials and Naked Wines plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Naked Wines plc 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 Naked Wines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Naked Wines plc has no effect on the direction of Martin Marietta i.e., Martin Marietta and Naked Wines go up and down completely randomly.

Pair Corralation between Martin Marietta and Naked Wines

Assuming the 90 days trading horizon Martin Marietta Materials is expected to generate 0.63 times more return on investment than Naked Wines. However, Martin Marietta Materials is 1.58 times less risky than Naked Wines. It trades about 0.09 of its potential returns per unit of risk. Naked Wines plc is currently generating about 0.02 per unit of risk. If you would invest  52,125  in Martin Marietta Materials on September 13, 2024 and sell it today you would earn a total of  4,243  from holding Martin Marietta Materials or generate 8.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Martin Marietta Materials  vs.  Naked Wines plc

Martin Marietta Materials

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Martin Marietta Materials are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Martin Marietta may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Naked Wines plc

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Naked Wines plc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Naked Wines 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 Martin Marietta and Naked Wines

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

The idea behind Martin Marietta Materials and Naked Wines plc 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 Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..