Correlation Between Herms International and Martin Marietta
Can any of the company-specific risk be diversified away by investing in both Herms International 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 Herms International and Martin Marietta into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Herms International Socit and Martin Marietta Materials, you can compare the effects of market volatilities on Herms International 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 Herms International with a short position of Martin Marietta. Check out your portfolio center. Please also check ongoing floating volatility patterns of Herms International and Martin Marietta.
Diversification Opportunities for Herms International and Martin Marietta
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Herms and Martin is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Herms International Socit 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 Herms International 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 Herms International Socit 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 Herms International i.e., Herms International and Martin Marietta go up and down completely randomly.
Pair Corralation between Herms International and Martin Marietta
Assuming the 90 days horizon Herms International Socit is expected to generate 1.61 times more return on investment than Martin Marietta. However, Herms International is 1.61 times more volatile than Martin Marietta Materials. It trades about 0.11 of its potential returns per unit of risk. Martin Marietta Materials is currently generating about 0.08 per unit of risk. If you would invest 200,800 in Herms International Socit on September 24, 2024 and sell it today you would earn a total of 30,500 from holding Herms International Socit or generate 15.19% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Herms International Socit vs. Martin Marietta Materials
Performance |
Timeline |
Herms International Socit |
Martin Marietta Materials |
Herms International and Martin Marietta Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Herms International and Martin Marietta
The main advantage of trading using opposite Herms International and Martin Marietta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Herms International 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.Herms International vs. Martin Marietta Materials | Herms International vs. Heidelberg Materials AG | Herms International vs. GRIFFIN MINING LTD | Herms International vs. Jacquet Metal Service |
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Check out your portfolio center.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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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