Correlation Between Summit Materials and Apogee Enterprises
Can any of the company-specific risk be diversified away by investing in both Summit Materials and Apogee Enterprises 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 Apogee Enterprises into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Materials and Apogee Enterprises, you can compare the effects of market volatilities on Summit Materials and Apogee Enterprises 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 Apogee Enterprises. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Materials and Apogee Enterprises.
Diversification Opportunities for Summit Materials and Apogee Enterprises
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Summit and Apogee is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials and Apogee Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apogee Enterprises 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 Apogee Enterprises. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apogee Enterprises has no effect on the direction of Summit Materials i.e., Summit Materials and Apogee Enterprises go up and down completely randomly.
Pair Corralation between Summit Materials and Apogee Enterprises
Considering the 90-day investment horizon Summit Materials is expected to generate 0.12 times more return on investment than Apogee Enterprises. However, Summit Materials is 8.06 times less risky than Apogee Enterprises. It trades about 0.33 of its potential returns per unit of risk. Apogee Enterprises is currently generating about -0.19 per unit of risk. If you would invest 5,054 in Summit Materials on December 28, 2024 and sell it today you would earn a total of 195.00 from holding Summit Materials or generate 3.86% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 48.33% |
Values | Daily Returns |
Summit Materials vs. Apogee Enterprises
Performance |
Timeline |
Summit Materials |
Risk-Adjusted Performance
Solid
Weak | Strong |
Apogee Enterprises |
Summit Materials and Apogee Enterprises Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Summit Materials and Apogee Enterprises
The main advantage of trading using opposite Summit Materials and Apogee Enterprises positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Materials position performs unexpectedly, Apogee Enterprises 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 Apogee Enterprises will offset losses from the drop in Apogee Enterprises' long position.Summit Materials vs. Martin Marietta Materials | Summit Materials vs. Vulcan Materials | Summit Materials vs. United States Lime | Summit Materials vs. James Hardie Industries |
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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