Correlation Between Summit Materials and Marfrig Global

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

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

Diversification Opportunities for Summit Materials and Marfrig Global

0.03

Correlation Coefficient

Summit Materials  Marfrig Global

Significant diversification

The 3 months correlation between Summit and Marfrig is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials and Marfrig Global Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marfrig Global Foods 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 Marfrig Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marfrig Global Foods has no effect on the direction of Summit Materials i.e., Summit Materials and Marfrig Global go up and down completely randomly.

Pair Corralation between Summit Materials and Marfrig Global

Considering the 90-day investment horizon Summit Materials is expected to generate 1.89 times less return on investment than Marfrig Global. But when comparing it to its historical volatility, Summit Materials is 8.42 times less risky than Marfrig Global. It trades about 0.33 of its potential returns per unit of risk. Marfrig Global Foods is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  274.00  in Marfrig Global Foods on December 29, 2024 and sell it today you would earn a total of  34.00  from holding Marfrig Global Foods or generate 12.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	47.54%
Values	Daily Returns

Summit Materials  vs.  Marfrig Global Foods

Summit Materials

Risk-Adjusted Performance

Solid

Over the last 90 days Summit Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very unfluctuating basic indicators, Summit Materials may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Marfrig Global Foods

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Marfrig Global Foods are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Marfrig Global showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Summit Materials and Marfrig Global

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

The idea behind Summit Materials and Marfrig Global Foods 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.