Correlation Between Fluent and Summit Materials

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

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

Diversification Opportunities for Fluent and Summit Materials

-0.47

Correlation Coefficient

Fluent  Summit Materials

Very good diversification

The 3 months correlation between Fluent and Summit is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Fluent Inc and Summit Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Materials and Fluent 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 Fluent Inc 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 Fluent i.e., Fluent and Summit Materials go up and down completely randomly.

Pair Corralation between Fluent and Summit Materials

Given the investment horizon of 90 days Fluent Inc is expected to under-perform the Summit Materials. In addition to that, Fluent is 1.96 times more volatile than Summit Materials. It trades about -0.03 of its total potential returns per unit of risk. Summit Materials is currently generating about 0.14 per unit of volatility. If you would invest  3,570  in Summit Materials on September 19, 2024 and sell it today you would earn a total of  1,502  from holding Summit Materials or generate 42.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.21%
Values	Daily Returns

Fluent Inc  vs.  Summit Materials

Fluent Inc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fluent Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Fluent may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Summit Materials

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Summit Materials are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Summit Materials displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fluent and Summit Materials

The main advantage of trading using opposite Fluent and Summit Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fluent 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 Fluent Inc and Summit Materials 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.