Correlation Between Summit Materials and Glacier Bancorp

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

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

Diversification Opportunities for Summit Materials and Glacier Bancorp

0.92

Correlation Coefficient

Summit Materials  Glacier Bancorp

Almost no diversification

The 3 months correlation between Summit and Glacier is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials and Glacier Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Glacier Bancorp 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 Glacier Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Glacier Bancorp has no effect on the direction of Summit Materials i.e., Summit Materials and Glacier Bancorp go up and down completely randomly.

Pair Corralation between Summit Materials and Glacier Bancorp

Considering the 90-day investment horizon Summit Materials is expected to generate 0.16 times more return on investment than Glacier Bancorp. However, Summit Materials is 6.17 times less risky than Glacier Bancorp. It trades about -0.07 of its potential returns per unit of risk. Glacier Bancorp is currently generating about -0.38 per unit of risk. If you would invest  5,085  in Summit Materials on September 27, 2024 and sell it today you would lose (21.00) from holding Summit Materials or give up 0.41% of portfolio value over 90 days.

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

Summit Materials  vs.  Glacier Bancorp

Summit Materials

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Summit Materials are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Summit Materials displayed solid returns over the last few months and may actually be approaching a breakup point.

Glacier Bancorp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Glacier Bancorp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile fundamental indicators, Glacier Bancorp demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Summit Materials and Glacier Bancorp

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

The idea behind Summit Materials and Glacier Bancorp 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.