Correlation Between Summit Materials and 48203RAM6

Can any of the company-specific risk be diversified away by investing in both Summit Materials and 48203RAM6 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 48203RAM6 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Summit Materials and US48203RAM60, you can compare the effects of market volatilities on Summit Materials and 48203RAM6 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 48203RAM6. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Materials and 48203RAM6.

Diversification Opportunities for Summit Materials and 48203RAM6

-0.01

Correlation Coefficient

Summit Materials  48203RAM6

Good diversification

The 3 months correlation between Summit and 48203RAM6 is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials and US48203RAM60 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US48203RAM60 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 48203RAM6. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US48203RAM60 has no effect on the direction of Summit Materials i.e., Summit Materials and 48203RAM6 go up and down completely randomly.

Pair Corralation between Summit Materials and 48203RAM6

Considering the 90-day investment horizon Summit Materials is expected to generate 0.94 times more return on investment than 48203RAM6. However, Summit Materials is 1.06 times less risky than 48203RAM6. It trades about 0.29 of its potential returns per unit of risk. US48203RAM60 is currently generating about 0.01 per unit of risk. If you would invest  5,059  in Summit Materials on December 23, 2024 and sell it today you would earn a total of  190.00  from holding Summit Materials or generate 3.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	56.9%
Values	Daily Returns

Summit Materials  vs.  US48203RAM60

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.

US48203RAM60

Risk-Adjusted Performance

Weak

Over the last 90 days US48203RAM60 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 48203RAM6 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Summit Materials and 48203RAM6

The main advantage of trading using opposite Summit Materials and 48203RAM6 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Materials position performs unexpectedly, 48203RAM6 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 48203RAM6 will offset losses from the drop in 48203RAM6's long position.

The idea behind Summit Materials and US48203RAM60 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.