Correlation Between Summit Materials and Intermediate Capital

Can any of the company-specific risk be diversified away by investing in both Summit Materials and Intermediate Capital 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 Intermediate Capital 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 Intermediate Capital Group, you can compare the effects of market volatilities on Summit Materials and Intermediate Capital 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 Intermediate Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Materials and Intermediate Capital.

Diversification Opportunities for Summit Materials and Intermediate Capital

-0.27

Correlation Coefficient

Summit Materials  Intermediate Capital

Very good diversification

The 3 months correlation between Summit and Intermediate is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials Cl and Intermediate Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intermediate Capital 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 Intermediate Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intermediate Capital has no effect on the direction of Summit Materials i.e., Summit Materials and Intermediate Capital go up and down completely randomly.

Pair Corralation between Summit Materials and Intermediate Capital

Assuming the 90 days trading horizon Summit Materials Cl is expected to generate 1.23 times more return on investment than Intermediate Capital. However, Summit Materials is 1.23 times more volatile than Intermediate Capital Group. It trades about 0.2 of its potential returns per unit of risk. Intermediate Capital Group is currently generating about -0.04 per unit of risk. If you would invest  3,838  in Summit Materials Cl on September 14, 2024 and sell it today you would earn a total of  1,252  from holding Summit Materials Cl or generate 32.62% return on investment over 90 days.

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

Summit Materials Cl  vs.  Intermediate Capital Group

Summit Materials

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Summit Materials Cl are ranked lower than 16 (%) 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.

Intermediate Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intermediate Capital Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Intermediate Capital is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Summit Materials and Intermediate Capital

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

The idea behind Summit Materials Cl and Intermediate Capital Group 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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.