Correlation Between Summit Materials and Fluent

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

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

Diversification Opportunities for Summit Materials and Fluent

-0.47

Correlation Coefficient

Summit Materials  Fluent

Very good diversification

The 3 months correlation between Summit and Fluent is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials and Fluent Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fluent Inc 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 Fluent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fluent Inc has no effect on the direction of Summit Materials i.e., Summit Materials and Fluent go up and down completely randomly.

Pair Corralation between Summit Materials and Fluent

Considering the 90-day investment horizon Summit Materials is expected to generate 0.44 times more return on investment than Fluent. However, Summit Materials is 2.25 times less risky than Fluent. It trades about 0.17 of its potential returns per unit of risk. Fluent Inc is currently generating about -0.2 per unit of risk. If you would invest  4,852  in Summit Materials on September 19, 2024 and sell it today you would earn a total of  225.00  from holding Summit Materials or generate 4.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Summit Materials  vs.  Fluent Inc

Summit Materials

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Summit Materials are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Summit Materials displayed solid returns over the last few months and may actually be approaching a breakup point.

Fluent Inc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fluent Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Fluent may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Summit Materials and Fluent

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

The idea behind Summit Materials and Fluent Inc 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.