Correlation Between Idaho Strategic and Summit Materials

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

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

Diversification Opportunities for Idaho Strategic and Summit Materials

-0.7

Correlation Coefficient

Idaho Strategic  Summit Materials

Excellent diversification

The 3 months correlation between Idaho and Summit is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Idaho Strategic Resources and Summit Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Materials and Idaho Strategic 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 Idaho Strategic Resources 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 Idaho Strategic i.e., Idaho Strategic and Summit Materials go up and down completely randomly.

Pair Corralation between Idaho Strategic and Summit Materials

Considering the 90-day investment horizon Idaho Strategic Resources is expected to generate 1.8 times more return on investment than Summit Materials. However, Idaho Strategic is 1.8 times more volatile than Summit Materials. It trades about 0.06 of its potential returns per unit of risk. Summit Materials is currently generating about 0.06 per unit of risk. If you would invest  538.00  in Idaho Strategic Resources on October 26, 2024 and sell it today you would earn a total of  696.00  from holding Idaho Strategic Resources or generate 129.37% return on investment over 90 days.

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

Idaho Strategic Resources  vs.  Summit Materials

Idaho Strategic Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Idaho Strategic Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's fundamental indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Summit Materials

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Summit Materials are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Summit Materials displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Idaho Strategic and Summit Materials

The main advantage of trading using opposite Idaho Strategic and Summit Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Idaho Strategic 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 Idaho Strategic Resources 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.