Correlation Between Summit Materials and Fiserv
Can any of the company-specific risk be diversified away by investing in both Summit Materials and Fiserv 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 Fiserv into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Materials and Fiserv Inc, you can compare the effects of market volatilities on Summit Materials and Fiserv 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 Fiserv. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Materials and Fiserv.
Diversification Opportunities for Summit Materials and Fiserv
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Summit and Fiserv is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials and Fiserv Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fiserv Inc 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 are associated (or correlated) with Fiserv. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fiserv Inc has no effect on the direction of Summit Materials i.e., Summit Materials and Fiserv go up and down completely randomly.
Pair Corralation between Summit Materials and Fiserv
Assuming the 90 days trading horizon Summit Materials is expected to generate 0.8 times more return on investment than Fiserv. However, Summit Materials is 1.25 times less risky than Fiserv. It trades about 0.26 of its potential returns per unit of risk. Fiserv Inc is currently generating about 0.16 per unit of risk. If you would invest 4,820 in Summit Materials on October 20, 2024 and sell it today you would earn a total of 230.00 from holding Summit Materials or generate 4.77% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Summit Materials vs. Fiserv Inc
Performance |
Timeline |
Summit Materials |
Fiserv Inc |
Summit Materials and Fiserv Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Summit Materials and Fiserv
The main advantage of trading using opposite Summit Materials and Fiserv positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Materials position performs unexpectedly, Fiserv 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 Fiserv will offset losses from the drop in Fiserv's long position.Summit Materials vs. NetSol Technologies | Summit Materials vs. Aluminum of | Summit Materials vs. Jacquet Metal Service | Summit Materials vs. Addtech AB |
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Check out your portfolio center.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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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