Correlation Between Summit Bank and Boot Barn

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Can any of the company-specific risk be diversified away by investing in both Summit Bank and Boot Barn 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 Bank and Boot Barn into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Bank Group and Boot Barn Holdings, you can compare the effects of market volatilities on Summit Bank and Boot Barn 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 Bank with a short position of Boot Barn. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Bank and Boot Barn.

Diversification Opportunities for Summit Bank and Boot Barn

0.08
  Correlation Coefficient

Significant diversification

The 3 months correlation between Summit and Boot is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Summit Bank Group and Boot Barn Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boot Barn Holdings and Summit Bank 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 Bank Group are associated (or correlated) with Boot Barn. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boot Barn Holdings has no effect on the direction of Summit Bank i.e., Summit Bank and Boot Barn go up and down completely randomly.

Pair Corralation between Summit Bank and Boot Barn

Given the investment horizon of 90 days Summit Bank Group is expected to under-perform the Boot Barn. But the pink sheet apears to be less risky and, when comparing its historical volatility, Summit Bank Group is 1.86 times less risky than Boot Barn. The pink sheet trades about -0.32 of its potential returns per unit of risk. The Boot Barn Holdings is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  15,576  in Boot Barn Holdings on October 26, 2024 and sell it today you would earn a total of  1,274  from holding Boot Barn Holdings or generate 8.18% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Summit Bank Group  vs.  Boot Barn Holdings

 Performance 
       Timeline  
Summit Bank Group 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Summit Bank Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very weak forward-looking signals, Summit Bank may actually be approaching a critical reversion point that can send shares even higher in February 2025.
Boot Barn Holdings 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Boot Barn Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Boot Barn may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Summit Bank and Boot Barn Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Summit Bank and Boot Barn

The main advantage of trading using opposite Summit Bank and Boot Barn positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Bank position performs unexpectedly, Boot Barn 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 Boot Barn will offset losses from the drop in Boot Barn's long position.
The idea behind Summit Bank Group and Boot Barn Holdings 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.

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