Correlation Between Summit Materials and TOPTB

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

By analyzing existing cross correlation between Summit Materials and TOPTB 5375 20 NOV 48, you can compare the effects of market volatilities on Summit Materials and TOPTB 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 TOPTB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Materials and TOPTB.

Diversification Opportunities for Summit Materials and TOPTB

-0.54

Correlation Coefficient

Summit Materials  TOPTB

Excellent diversification

The 3 months correlation between Summit and TOPTB is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials and TOPTB 5375 20 NOV 48 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TOPTB 5375 20 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 TOPTB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TOPTB 5375 20 has no effect on the direction of Summit Materials i.e., Summit Materials and TOPTB go up and down completely randomly.

Pair Corralation between Summit Materials and TOPTB

Considering the 90-day investment horizon Summit Materials is expected to generate 7.03 times less return on investment than TOPTB. But when comparing it to its historical volatility, Summit Materials is 5.72 times less risky than TOPTB. It trades about 0.35 of its potential returns per unit of risk. TOPTB 5375 20 NOV 48 is currently generating about 0.43 of returns per unit of risk over similar time horizon. If you would invest  8,354  in TOPTB 5375 20 NOV 48 on December 4, 2024 and sell it today you would earn a total of  232.00  from holding TOPTB 5375 20 NOV 48 or generate 2.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	77.78%
Values	Daily Returns

Summit Materials  vs.  TOPTB 5375 20 NOV 48

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.

TOPTB 5375 20

Risk-Adjusted Performance

Very Weak

Over the last 90 days TOPTB 5375 20 NOV 48 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for TOPTB 5375 20 NOV 48 investors.

Pair Trading with Summit Materials and TOPTB

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

The idea behind Summit Materials and TOPTB 5375 20 NOV 48 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.

Check out your portfolio center.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.