Correlation Between Summit Materials and AMCON Distributing
Can any of the company-specific risk be diversified away by investing in both Summit Materials and AMCON Distributing 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 AMCON Distributing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Materials and AMCON Distributing, you can compare the effects of market volatilities on Summit Materials and AMCON Distributing 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 AMCON Distributing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Materials and AMCON Distributing.
Diversification Opportunities for Summit Materials and AMCON Distributing
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Summit and AMCON is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials and AMCON Distributing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMCON Distributing 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 AMCON Distributing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMCON Distributing has no effect on the direction of Summit Materials i.e., Summit Materials and AMCON Distributing go up and down completely randomly.
Pair Corralation between Summit Materials and AMCON Distributing
Considering the 90-day investment horizon Summit Materials is expected to generate 0.09 times more return on investment than AMCON Distributing. However, Summit Materials is 11.55 times less risky than AMCON Distributing. It trades about 0.31 of its potential returns per unit of risk. AMCON Distributing is currently generating about 0.01 per unit of risk. If you would invest 5,037 in Summit Materials on December 18, 2024 and sell it today you would earn a total of 212.00 from holding Summit Materials or generate 4.21% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 61.02% |
Values | Daily Returns |
Summit Materials vs. AMCON Distributing
Performance |
Timeline |
Summit Materials |
Risk-Adjusted Performance
Solid
Weak | Strong |
AMCON Distributing |
Summit Materials and AMCON Distributing Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Summit Materials and AMCON Distributing
The main advantage of trading using opposite Summit Materials and AMCON Distributing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Materials position performs unexpectedly, AMCON Distributing 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 AMCON Distributing will offset losses from the drop in AMCON Distributing's 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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