Correlation Between Summit Materials and Blackrock World

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

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

Diversification Opportunities for Summit Materials and Blackrock World

-0.61

Correlation Coefficient

Summit Materials  Blackrock World

Excellent diversification

The 3 months correlation between Summit and Blackrock is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials Cl and Blackrock World Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock World Mining and Summit 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 Summit Materials Cl are associated (or correlated) with Blackrock World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock World Mining has no effect on the direction of Summit Materials i.e., Summit Materials and Blackrock World go up and down completely randomly.

Pair Corralation between Summit Materials and Blackrock World

Assuming the 90 days trading horizon Summit Materials is expected to generate 2.0 times less return on investment than Blackrock World. But when comparing it to its historical volatility, Summit Materials Cl is 2.57 times less risky than Blackrock World. It trades about 0.36 of its potential returns per unit of risk. Blackrock World Mining is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  47,200  in Blackrock World Mining on October 20, 2024 and sell it today you would earn a total of  3,100  from holding Blackrock World Mining or generate 6.57% return on investment over 90 days.

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

Summit Materials Cl  vs.  Blackrock World Mining

Summit Materials

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Summit Materials Cl are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Summit Materials unveiled solid returns over the last few months and may actually be approaching a breakup point.

Blackrock World Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blackrock World Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Blackrock World 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 Summit Materials and Blackrock World

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

The idea behind Summit Materials Cl and Blackrock World Mining 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.