Correlation Between Eagle Materials and Martin Marietta

Can any of the company-specific risk be diversified away by investing in both Eagle Materials and Martin Marietta 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 Eagle Materials and Martin Marietta into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Eagle Materials and Martin Marietta Materials, you can compare the effects of market volatilities on Eagle Materials and Martin Marietta 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 Eagle Materials with a short position of Martin Marietta. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagle Materials and Martin Marietta.

Diversification Opportunities for Eagle Materials and Martin Marietta

0.25

Correlation Coefficient

Eagle Materials  Martin Marietta

Modest diversification

The 3 months correlation between Eagle and Martin is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Materials and Martin Marietta Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Martin Marietta Materials and Eagle Materials 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 Eagle Materials are associated (or correlated) with Martin Marietta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Martin Marietta Materials has no effect on the direction of Eagle Materials i.e., Eagle Materials and Martin Marietta go up and down completely randomly.

Pair Corralation between Eagle Materials and Martin Marietta

Assuming the 90 days horizon Eagle Materials is expected to under-perform the Martin Marietta. In addition to that, Eagle Materials is 1.62 times more volatile than Martin Marietta Materials. It trades about -0.01 of its total potential returns per unit of risk. Martin Marietta Materials is currently generating about 0.1 per unit of volatility. If you would invest  44,306  in Martin Marietta Materials on April 25, 2025 and sell it today you would earn a total of  4,364  from holding Martin Marietta Materials or generate 9.85% return on investment over 90 days.

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

Eagle Materials  vs.  Martin Marietta Materials

Eagle Materials

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eagle Materials has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Eagle Materials is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Martin Marietta Materials

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Martin Marietta Materials are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Martin Marietta may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Eagle Materials and Martin Marietta

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

The idea behind Eagle Materials and Martin Marietta Materials 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.