Correlation Between Martin Marietta and PureTech Health

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

Diversification Opportunities for Martin Marietta and PureTech Health

0.58

Correlation Coefficient

Martin Marietta  PureTech Health

Very weak diversification

The 3 months correlation between Martin and PureTech is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Martin Marietta Materials and PureTech Health plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PureTech Health plc 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 PureTech Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PureTech Health plc has no effect on the direction of Martin Marietta i.e., Martin Marietta and PureTech Health go up and down completely randomly.

Pair Corralation between Martin Marietta and PureTech Health

Assuming the 90 days trading horizon Martin Marietta Materials is expected to generate 0.6 times more return on investment than PureTech Health. However, Martin Marietta Materials is 1.67 times less risky than PureTech Health. It trades about 0.16 of its potential returns per unit of risk. PureTech Health plc is currently generating about 0.04 per unit of risk. If you would invest  49,639  in Martin Marietta Materials on April 13, 2025 and sell it today you would earn a total of  6,021  from holding Martin Marietta Materials or generate 12.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	88.52%
Values	Daily Returns

Martin Marietta Materials  vs.  PureTech Health plc

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 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Martin Marietta unveiled solid returns over the last few months and may actually be approaching a breakup point.

PureTech Health plc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PureTech Health plc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, PureTech Health is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Martin Marietta and PureTech Health

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

The idea behind Martin Marietta Materials and PureTech Health plc 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.