Correlation Between MYT Netherlands and Summit Materials

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

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

Diversification Opportunities for MYT Netherlands and Summit Materials

0.03

Correlation Coefficient

MYT Netherlands  Summit Materials

Significant diversification

The 3 months correlation between MYT and Summit is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding MYT Netherlands Parent and Summit Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Materials and MYT Netherlands 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 MYT Netherlands Parent 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 MYT Netherlands i.e., MYT Netherlands and Summit Materials go up and down completely randomly.

Pair Corralation between MYT Netherlands and Summit Materials

Given the investment horizon of 90 days MYT Netherlands Parent is expected to generate 2.89 times more return on investment than Summit Materials. However, MYT Netherlands is 2.89 times more volatile than Summit Materials. It trades about 0.11 of its potential returns per unit of risk. Summit Materials is currently generating about 0.08 per unit of risk. If you would invest  299.00  in MYT Netherlands Parent on October 22, 2024 and sell it today you would earn a total of  640.00  from holding MYT Netherlands Parent or generate 214.05% return on investment over 90 days.

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

MYT Netherlands Parent  vs.  Summit Materials

MYT Netherlands Parent

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MYT Netherlands Parent are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal basic indicators, MYT Netherlands exhibited solid returns over the last few months and may actually be approaching a breakup point.

Summit Materials

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Summit Materials are ranked lower than 19 (%) 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 MYT Netherlands and Summit Materials

The main advantage of trading using opposite MYT Netherlands and Summit Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MYT Netherlands 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 MYT Netherlands Parent 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.

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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.