Correlation Between Martin Marietta and Enbridge

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

Diversification Opportunities for Martin Marietta and Enbridge

0.13

Correlation Coefficient

Martin Marietta  Enbridge

Average diversification

The 3 months correlation between Martin and Enbridge is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Martin Marietta Materials and Enbridge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enbridge 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 Enbridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enbridge has no effect on the direction of Martin Marietta i.e., Martin Marietta and Enbridge go up and down completely randomly.

Pair Corralation between Martin Marietta and Enbridge

Assuming the 90 days trading horizon Martin Marietta Materials is expected to generate 1.01 times more return on investment than Enbridge. However, Martin Marietta is 1.01 times more volatile than Enbridge. It trades about 0.15 of its potential returns per unit of risk. Enbridge is currently generating about -0.06 per unit of risk. If you would invest  50,550  in Martin Marietta Materials on April 24, 2025 and sell it today you would earn a total of  5,857  from holding Martin Marietta Materials or generate 11.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	61.11%
Values	Daily Returns

Martin Marietta Materials  vs.  Enbridge

Martin Marietta Materials

Risk-Adjusted Performance

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 comparatively uncertain basic indicators, Martin Marietta unveiled solid returns over the last few months and may actually be approaching a breakup point.

Enbridge

Risk-Adjusted Performance

Very Weak

Over the last 90 days Enbridge has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Enbridge is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Martin Marietta and Enbridge

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

The idea behind Martin Marietta Materials and Enbridge 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.