Correlation Between Summit Materials and SVELEV

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

By analyzing existing cross correlation between Summit Materials and SVELEV 13 10 FEB 28, you can compare the effects of market volatilities on Summit Materials and SVELEV 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 SVELEV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Materials and SVELEV.

Diversification Opportunities for Summit Materials and SVELEV

0.69

Correlation Coefficient

Summit Materials  SVELEV

Poor diversification

The 3 months correlation between Summit and SVELEV is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials and SVELEV 13 10 FEB 28 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SVELEV 13 10 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 SVELEV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SVELEV 13 10 has no effect on the direction of Summit Materials i.e., Summit Materials and SVELEV go up and down completely randomly.

Pair Corralation between Summit Materials and SVELEV

Considering the 90-day investment horizon Summit Materials is expected to generate 0.29 times more return on investment than SVELEV. However, Summit Materials is 3.5 times less risky than SVELEV. It trades about 0.2 of its potential returns per unit of risk. SVELEV 13 10 FEB 28 is currently generating about -0.11 per unit of risk. If you would invest  5,080  in Summit Materials on December 4, 2024 and sell it today you would earn a total of  169.00  from holding Summit Materials or generate 3.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	93.88%
Values	Daily Returns

Summit Materials  vs.  SVELEV 13 10 FEB 28

Summit Materials

Risk-Adjusted Performance

Good

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 healthy basic indicators, Summit Materials is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

SVELEV 13 10

Risk-Adjusted Performance

Very Weak

Over the last 90 days SVELEV 13 10 FEB 28 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for SVELEV 13 10 FEB 28 investors.

Pair Trading with Summit Materials and SVELEV

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

The idea behind Summit Materials and SVELEV 13 10 FEB 28 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.