Correlation Between 019736AG2 and Summit Materials

Can any of the company-specific risk be diversified away by investing in both 019736AG2 and Summit Materials 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 019736AG2 and Summit Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between US019736AG29 and Summit Materials, you can compare the effects of market volatilities on 019736AG2 and Summit Materials 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 019736AG2 with a short position of Summit Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of 019736AG2 and Summit Materials.

Diversification Opportunities for 019736AG2 and Summit Materials

-0.68

Correlation Coefficient

019736AG2  Summit Materials

Excellent diversification

The 3 months correlation between 019736AG2 and Summit is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding US019736AG29 and Summit Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Materials and 019736AG2 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 US019736AG29 are associated (or correlated) with Summit Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Materials has no effect on the direction of 019736AG2 i.e., 019736AG2 and Summit Materials go up and down completely randomly.

Pair Corralation between 019736AG2 and Summit Materials

Assuming the 90 days trading horizon US019736AG29 is expected to under-perform the Summit Materials. But the bond apears to be less risky and, when comparing its historical volatility, US019736AG29 is 4.43 times less risky than Summit Materials. The bond trades about -0.12 of its potential returns per unit of risk. The Summit Materials is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  3,916  in Summit Materials on September 21, 2024 and sell it today you would earn a total of  1,148  from holding Summit Materials or generate 29.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	96.26%
Values	Daily Returns

US019736AG29  vs.  Summit Materials

US019736AG29

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days US019736AG29 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating 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 US019736AG29 investors.

Summit Materials

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Summit Materials are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Summit Materials displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with 019736AG2 and Summit Materials

The main advantage of trading using opposite 019736AG2 and Summit Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 019736AG2 position performs unexpectedly, Summit Materials 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 Summit Materials will offset losses from the drop in Summit Materials' long position.

The idea behind US019736AG29 and Summit Materials 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.