Correlation Between Markel Corp and Summit Materials

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

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

Diversification Opportunities for Markel Corp and Summit Materials

0.82

Correlation Coefficient

Markel Corp  Summit Materials

Very poor diversification

The 3 months correlation between Markel and Summit is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Markel Corp and Summit Materials Cl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Materials and Markel Corp 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 Markel Corp are associated (or correlated) with Summit Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Materials has no effect on the direction of Markel Corp i.e., Markel Corp and Summit Materials go up and down completely randomly.

Pair Corralation between Markel Corp and Summit Materials

Assuming the 90 days trading horizon Markel Corp is expected to under-perform the Summit Materials. In addition to that, Markel Corp is 1.89 times more volatile than Summit Materials Cl. It trades about -0.1 of its total potential returns per unit of risk. Summit Materials Cl is currently generating about 0.26 per unit of volatility. If you would invest  5,083  in Summit Materials Cl on October 10, 2024 and sell it today you would earn a total of  119.00  from holding Summit Materials Cl or generate 2.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.0%
Values	Daily Returns

Markel Corp  vs.  Summit Materials Cl

Markel Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Markel Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Markel Corp may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Summit Materials

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Summit Materials Cl are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Summit Materials unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Markel Corp and Summit Materials

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

The idea behind Markel Corp and Summit Materials Cl 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.