Correlation Between Martin Marietta and Wolters Kluwer

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

Diversification Opportunities for Martin Marietta and Wolters Kluwer

0.35

Correlation Coefficient

Martin Marietta  Wolters Kluwer

Weak diversification

The 3 months correlation between Martin and Wolters is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Martin Marietta Materials and Wolters Kluwer NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wolters Kluwer NV 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 Wolters Kluwer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wolters Kluwer NV has no effect on the direction of Martin Marietta i.e., Martin Marietta and Wolters Kluwer go up and down completely randomly.

Pair Corralation between Martin Marietta and Wolters Kluwer

Assuming the 90 days trading horizon Martin Marietta Materials is expected to generate 1.37 times more return on investment than Wolters Kluwer. However, Martin Marietta is 1.37 times more volatile than Wolters Kluwer NV. It trades about 0.13 of its potential returns per unit of risk. Wolters Kluwer NV is currently generating about -0.11 per unit of risk. If you would invest  42,888  in Martin Marietta Materials on April 20, 2025 and sell it today you would earn a total of  5,412  from holding Martin Marietta Materials or generate 12.62% return on investment over 90 days.

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

Martin Marietta Materials  vs.  Wolters Kluwer NV

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

Wolters Kluwer NV

Risk-Adjusted Performance

Very Weak

Over the last 90 days Wolters Kluwer NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Martin Marietta and Wolters Kluwer

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

The idea behind Martin Marietta Materials and Wolters Kluwer NV 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.