Correlation Between Neometals and Summit Materials

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

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

Diversification Opportunities for Neometals and Summit Materials

-0.59

Correlation Coefficient

Neometals  Summit Materials

Excellent diversification

The 3 months correlation between Neometals and Summit is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Neometals and Summit Materials Cl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Materials and Neometals 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 Neometals 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 Neometals i.e., Neometals and Summit Materials go up and down completely randomly.

Pair Corralation between Neometals and Summit Materials

Assuming the 90 days trading horizon Neometals is expected to under-perform the Summit Materials. In addition to that, Neometals is 2.28 times more volatile than Summit Materials Cl. It trades about -0.1 of its total potential returns per unit of risk. Summit Materials Cl is currently generating about 0.05 per unit of volatility. If you would invest  3,687  in Summit Materials Cl on October 4, 2024 and sell it today you would earn a total of  1,377  from holding Summit Materials Cl or generate 37.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.47%
Values	Daily Returns

Neometals  vs.  Summit Materials Cl

Neometals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Neometals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Summit Materials

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Summit Materials Cl are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Summit Materials unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Neometals and Summit Materials

The main advantage of trading using opposite Neometals and Summit Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Neometals 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 Neometals and Summit Materials Cl 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.