Correlation Between Summit Materials and Jacquet Metal
Can any of the company-specific risk be diversified away by investing in both Summit Materials and Jacquet Metal 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 Jacquet Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Materials Cl and Jacquet Metal Service, you can compare the effects of market volatilities on Summit Materials and Jacquet Metal 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 Jacquet Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Materials and Jacquet Metal.
Diversification Opportunities for Summit Materials and Jacquet Metal
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Summit and Jacquet is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials Cl and Jacquet Metal Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jacquet Metal Service 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 Cl are associated (or correlated) with Jacquet Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jacquet Metal Service has no effect on the direction of Summit Materials i.e., Summit Materials and Jacquet Metal go up and down completely randomly.
Pair Corralation between Summit Materials and Jacquet Metal
Assuming the 90 days trading horizon Summit Materials is expected to generate 2.04 times less return on investment than Jacquet Metal. But when comparing it to its historical volatility, Summit Materials Cl is 1.15 times less risky than Jacquet Metal. It trades about 0.17 of its potential returns per unit of risk. Jacquet Metal Service is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 1,530 in Jacquet Metal Service on September 20, 2024 and sell it today you would earn a total of 194.00 from holding Jacquet Metal Service or generate 12.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Summit Materials Cl vs. Jacquet Metal Service
Performance |
| Timeline |
| Summit Materials |
| Jacquet Metal Service |
Summit Materials and Jacquet Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Materials and Jacquet Metal
The main advantage of trading using opposite Summit Materials and Jacquet Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Materials position performs unexpectedly, Jacquet Metal 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 Jacquet Metal will offset losses from the drop in Jacquet Metal's long position.| Summit Materials vs. Samsung Electronics Co | Summit Materials vs. Samsung Electronics Co | Summit Materials vs. Hyundai Motor | Summit Materials vs. Reliance Industries Ltd |
| Jacquet Metal vs. Samsung Electronics Co | Jacquet Metal vs. Samsung Electronics Co | Jacquet Metal vs. Hyundai Motor | Jacquet Metal vs. Reliance Industries Ltd |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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