Correlation Between Summit Materials and Ameritrans Capital

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

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

Diversification Opportunities for Summit Materials and Ameritrans Capital

-0.45

Correlation Coefficient

Summit Materials  Ameritrans Capital

Very good diversification

The 3 months correlation between Summit and Ameritrans is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials and Ameritrans Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameritrans Capital Corp and Summit Materials 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 Materials are associated (or correlated) with Ameritrans Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ameritrans Capital Corp has no effect on the direction of Summit Materials i.e., Summit Materials and Ameritrans Capital go up and down completely randomly.

Pair Corralation between Summit Materials and Ameritrans Capital

Considering the 90-day investment horizon Summit Materials is expected to generate 0.07 times more return on investment than Ameritrans Capital. However, Summit Materials is 13.37 times less risky than Ameritrans Capital. It trades about 0.17 of its potential returns per unit of risk. Ameritrans Capital Corp is currently generating about -0.13 per unit of risk. If you would invest  4,840  in Summit Materials on November 20, 2024 and sell it today you would earn a total of  409.00  from holding Summit Materials or generate 8.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	87.3%
Values	Daily Returns

Summit Materials  vs.  Ameritrans Capital Corp

Summit Materials

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Summit Materials are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Summit Materials may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Ameritrans Capital Corp

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Summit Materials and Ameritrans Capital

The main advantage of trading using opposite Summit Materials and Ameritrans Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Materials position performs unexpectedly, Ameritrans Capital 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 Ameritrans Capital will offset losses from the drop in Ameritrans Capital's long position.

The idea behind Summit Materials and Ameritrans Capital Corp 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.