Correlation Between Summit Materials and Unum

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

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

Diversification Opportunities for Summit Materials and Unum

0.75

Correlation Coefficient

Summit Materials  Unum

Poor diversification

The 3 months correlation between Summit and Unum is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials and Unum Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unum Group 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 Unum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unum Group has no effect on the direction of Summit Materials i.e., Summit Materials and Unum go up and down completely randomly.

Pair Corralation between Summit Materials and Unum

Considering the 90-day investment horizon Summit Materials is expected to generate 1.02 times less return on investment than Unum. In addition to that, Summit Materials is 1.33 times more volatile than Unum Group. It trades about 0.09 of its total potential returns per unit of risk. Unum Group is currently generating about 0.12 per unit of volatility. If you would invest  3,708  in Unum Group on December 27, 2024 and sell it today you would earn a total of  4,475  from holding Unum Group or generate 120.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	93.72%
Values	Daily Returns

Summit Materials  vs.  Unum Group

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.

Unum Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Unum Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Unum displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Summit Materials and Unum

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

The idea behind Summit Materials and Unum Group 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.