Correlation Between JD SPORTS and Martin Marietta

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

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

Diversification Opportunities for JD SPORTS and Martin Marietta

-0.74

Correlation Coefficient

JD SPORTS  Martin Marietta

Pay attention - limited upside

The 3 months correlation between 9JD and Martin is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding JD SPORTS FASH 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 JD SPORTS 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 JD SPORTS FASH 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 JD SPORTS i.e., JD SPORTS and Martin Marietta go up and down completely randomly.

Pair Corralation between JD SPORTS and Martin Marietta

Assuming the 90 days horizon JD SPORTS FASH is expected to under-perform the Martin Marietta. In addition to that, JD SPORTS is 1.71 times more volatile than Martin Marietta Materials. It trades about -0.1 of its total potential returns per unit of risk. Martin Marietta Materials is currently generating about 0.19 per unit of volatility. If you would invest  45,436  in Martin Marietta Materials on September 5, 2024 and sell it today you would earn a total of  10,944  from holding Martin Marietta Materials or generate 24.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

JD SPORTS FASH  vs.  Martin Marietta Materials

JD SPORTS FASH

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JD SPORTS FASH has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Martin Marietta Materials

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Martin Marietta Materials are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Martin Marietta reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with JD SPORTS and Martin Marietta

The main advantage of trading using opposite JD SPORTS and Martin Marietta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JD SPORTS 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 JD SPORTS FASH 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 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.