Correlation Between Martin Marietta and Value Grupo

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

Diversification Opportunities for Martin Marietta and Value Grupo

-0.1

Correlation Coefficient

Martin Marietta  Value Grupo

Good diversification

The 3 months correlation between Martin and Value is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Martin Marietta Materials and Value Grupo Financiero in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Value Grupo Financiero 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 Value Grupo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Value Grupo Financiero has no effect on the direction of Martin Marietta i.e., Martin Marietta and Value Grupo go up and down completely randomly.

Pair Corralation between Martin Marietta and Value Grupo

Assuming the 90 days trading horizon Martin Marietta Materials is expected to generate 0.71 times more return on investment than Value Grupo. However, Martin Marietta Materials is 1.41 times less risky than Value Grupo. It trades about 0.06 of its potential returns per unit of risk. Value Grupo Financiero is currently generating about 0.01 per unit of risk. If you would invest  1,047,993  in Martin Marietta Materials on September 14, 2024 and sell it today you would earn a total of  131,841  from holding Martin Marietta Materials or generate 12.58% return on investment over 90 days.

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

Martin Marietta Materials  vs.  Value Grupo Financiero

Martin Marietta Materials

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Martin Marietta Materials are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating primary indicators, Martin Marietta showed solid returns over the last few months and may actually be approaching a breakup point.

Value Grupo Financiero

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Value Grupo Financiero are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Value Grupo is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Martin Marietta and Value Grupo

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

The idea behind Martin Marietta Materials and Value Grupo Financiero 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.

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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .