Correlation Between Summit Materials and Organic Sales

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

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

Diversification Opportunities for Summit Materials and Organic Sales

0.0

Correlation Coefficient

Summit Materials  Organic Sales

Pay attention - limited upside

The 3 months correlation between Summit and Organic is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials and Organic Sales and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Organic Sales 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 Organic Sales. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Organic Sales has no effect on the direction of Summit Materials i.e., Summit Materials and Organic Sales go up and down completely randomly.

Pair Corralation between Summit Materials and Organic Sales

If you would invest  3,570  in Summit Materials on September 19, 2024 and sell it today you would earn a total of  1,502  from holding Summit Materials or generate 42.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.21%
Values	Daily Returns

Summit Materials  vs.  Organic Sales and

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.

Organic Sales

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Organic Sales and has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Organic Sales is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Summit Materials and Organic Sales

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

The idea behind Summit Materials and Organic Sales and 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.