Correlation Between Martin Marietta and Cemex SAB

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

Diversification Opportunities for Martin Marietta and Cemex SAB

-0.45

Correlation Coefficient

Martin Marietta  Cemex SAB

Very good diversification

The 3 months correlation between Martin and Cemex is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Martin Marietta Materials and Cemex SAB de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cemex SAB de 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 Cemex SAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cemex SAB de has no effect on the direction of Martin Marietta i.e., Martin Marietta and Cemex SAB go up and down completely randomly.

Pair Corralation between Martin Marietta and Cemex SAB

Considering the 90-day investment horizon Martin Marietta Materials is expected to under-perform the Cemex SAB. But the stock apears to be less risky and, when comparing its historical volatility, Martin Marietta Materials is 1.88 times less risky than Cemex SAB. The stock trades about -0.19 of its potential returns per unit of risk. The Cemex SAB de is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  522.00  in Cemex SAB de on October 1, 2024 and sell it today you would earn a total of  46.00  from holding Cemex SAB de or generate 8.81% return on investment over 90 days.

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

Martin Marietta Materials  vs.  Cemex SAB de

Martin Marietta Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Martin Marietta Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy essential indicators, Martin Marietta is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Cemex SAB de

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cemex SAB de has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Cemex SAB is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Martin Marietta and Cemex SAB

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

The idea behind Martin Marietta Materials and Cemex SAB de 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.