Correlation Between Monarch Cement and Martin Marietta

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

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

Diversification Opportunities for Monarch Cement and Martin Marietta

0.67

Correlation Coefficient

Monarch Cement  Martin Marietta

Poor diversification

The 3 months correlation between Monarch and Martin is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding The Monarch Cement 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 Monarch Cement 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 The Monarch Cement 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 Monarch Cement i.e., Monarch Cement and Martin Marietta go up and down completely randomly.

Pair Corralation between Monarch Cement and Martin Marietta

Given the investment horizon of 90 days The Monarch Cement is expected to generate 1.38 times more return on investment than Martin Marietta. However, Monarch Cement is 1.38 times more volatile than Martin Marietta Materials. It trades about 0.12 of its potential returns per unit of risk. Martin Marietta Materials is currently generating about 0.1 per unit of risk. If you would invest  19,000  in The Monarch Cement on September 12, 2024 and sell it today you would earn a total of  2,831  from holding The Monarch Cement or generate 14.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

The Monarch Cement  vs.  Martin Marietta Materials

Monarch Cement

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Monarch Cement are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal technical and fundamental indicators, Monarch Cement displayed solid returns over the last few months and may actually be approaching a breakup point.

Martin Marietta Materials

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Martin Marietta Materials are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent essential indicators, Martin Marietta may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Monarch Cement and Martin Marietta

The main advantage of trading using opposite Monarch Cement and Martin Marietta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monarch Cement 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 The Monarch Cement 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.