Correlation Between Summit Materials and Jenoptik
Can any of the company-specific risk be diversified away by investing in both Summit Materials and Jenoptik 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 Jenoptik into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Materials and Jenoptik AG, you can compare the effects of market volatilities on Summit Materials and Jenoptik 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 Jenoptik. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Materials and Jenoptik.
Diversification Opportunities for Summit Materials and Jenoptik
-0.92 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Summit and Jenoptik is -0.92. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials and Jenoptik AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jenoptik AG 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 Jenoptik. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jenoptik AG has no effect on the direction of Summit Materials i.e., Summit Materials and Jenoptik go up and down completely randomly.
Pair Corralation between Summit Materials and Jenoptik
Assuming the 90 days trading horizon Summit Materials is expected to generate 1.04 times more return on investment than Jenoptik. However, Summit Materials is 1.04 times more volatile than Jenoptik AG. It trades about 0.07 of its potential returns per unit of risk. Jenoptik AG is currently generating about -0.03 per unit of risk. If you would invest 3,460 in Summit Materials on September 14, 2024 and sell it today you would earn a total of 1,360 from holding Summit Materials or generate 39.31% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Summit Materials vs. Jenoptik AG
Performance |
Timeline |
Summit Materials |
Jenoptik AG |
Summit Materials and Jenoptik Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Summit Materials and Jenoptik
The main advantage of trading using opposite Summit Materials and Jenoptik positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Materials position performs unexpectedly, Jenoptik 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 Jenoptik will offset losses from the drop in Jenoptik's long position.Summit Materials vs. Apple Inc | Summit Materials vs. Apple Inc | Summit Materials vs. Apple Inc | Summit Materials vs. Apple Inc |
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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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