Correlation Between Martin Marietta and F5 Networks

Can any of the company-specific risk be diversified away by investing in both Martin Marietta and F5 Networks 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 F5 Networks 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 F5 Networks, you can compare the effects of market volatilities on Martin Marietta and F5 Networks 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 F5 Networks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Martin Marietta and F5 Networks.

Diversification Opportunities for Martin Marietta and F5 Networks

0.75

Correlation Coefficient

Martin Marietta  F5 Networks

Poor diversification

The 3 months correlation between Martin and FFIV is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Martin Marietta Materials and F5 Networks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on F5 Networks 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 F5 Networks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of F5 Networks has no effect on the direction of Martin Marietta i.e., Martin Marietta and F5 Networks go up and down completely randomly.

Pair Corralation between Martin Marietta and F5 Networks

If you would invest  464,253  in F5 Networks on September 28, 2024 and sell it today you would earn a total of  0.00  from holding F5 Networks or generate 0.0% return on investment over 90 days.

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

Martin Marietta Materials  vs.  F5 Networks

Martin Marietta Materials

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Martin Marietta Materials are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating primary indicators, Martin Marietta may actually be approaching a critical reversion point that can send shares even higher in January 2025.

F5 Networks

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in F5 Networks are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, F5 Networks showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Martin Marietta and F5 Networks

The main advantage of trading using opposite Martin Marietta and F5 Networks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Martin Marietta position performs unexpectedly, F5 Networks 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 F5 Networks will offset losses from the drop in F5 Networks' long position.

The idea behind Martin Marietta Materials and F5 Networks 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.