Correlation Between Summit Materials and Global Net

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

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

Diversification Opportunities for Summit Materials and Global Net

-0.26

Correlation Coefficient

Summit Materials  Global Net

Very good diversification

The 3 months correlation between Summit and Global is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials and Global Net Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Net Lease 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 Global Net. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Net Lease has no effect on the direction of Summit Materials i.e., Summit Materials and Global Net go up and down completely randomly.

Pair Corralation between Summit Materials and Global Net

Considering the 90-day investment horizon Summit Materials is expected to generate 0.26 times more return on investment than Global Net. However, Summit Materials is 3.8 times less risky than Global Net. It trades about 0.21 of its potential returns per unit of risk. Global Net Lease is currently generating about 0.0 per unit of risk. If you would invest  5,090  in Summit Materials on October 11, 2024 and sell it today you would earn a total of  114.00  from holding Summit Materials or generate 2.24% return on investment over 90 days.

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

Summit Materials  vs.  Global Net Lease

Summit Materials

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Summit Materials are ranked lower than 21 (%) 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.

Global Net Lease

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Net Lease has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound essential indicators, Global Net is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Summit Materials and Global Net

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

The idea behind Summit Materials and Global Net Lease 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.

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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.