Correlation Between XLMedia PLC and Summit Materials

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

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

Diversification Opportunities for XLMedia PLC and Summit Materials

-0.42

Correlation Coefficient

XLMedia PLC  Summit Materials

Very good diversification

The 3 months correlation between XLMedia and Summit is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding XLMedia PLC and Summit Materials Cl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Materials and XLMedia PLC 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 XLMedia PLC 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 XLMedia PLC i.e., XLMedia PLC and Summit Materials go up and down completely randomly.

Pair Corralation between XLMedia PLC and Summit Materials

Assuming the 90 days trading horizon XLMedia PLC is expected to under-perform the Summit Materials. In addition to that, XLMedia PLC is 10.48 times more volatile than Summit Materials Cl. It trades about -0.04 of its total potential returns per unit of risk. Summit Materials Cl is currently generating about 0.23 per unit of volatility. If you would invest  5,067  in Summit Materials Cl on December 4, 2024 and sell it today you would earn a total of  167.00  from holding Summit Materials Cl or generate 3.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	72.13%
Values	Daily Returns

XLMedia PLC  vs.  Summit Materials Cl

XLMedia PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days XLMedia PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Summit Materials

Risk-Adjusted Performance

Solid

Over the last 90 days Summit Materials Cl has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Summit Materials is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with XLMedia PLC and Summit Materials

The main advantage of trading using opposite XLMedia PLC and Summit Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XLMedia PLC 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 XLMedia PLC and Summit Materials Cl 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.