Correlation Between Summit Materials and Magnora ASA
Can any of the company-specific risk be diversified away by investing in both Summit Materials and Magnora ASA 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 Magnora ASA 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 Magnora ASA, you can compare the effects of market volatilities on Summit Materials and Magnora ASA 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 Magnora ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Materials and Magnora ASA.
Diversification Opportunities for Summit Materials and Magnora ASA
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Summit and Magnora is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials Cl and Magnora ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magnora ASA 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 Magnora ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magnora ASA has no effect on the direction of Summit Materials i.e., Summit Materials and Magnora ASA go up and down completely randomly.
Pair Corralation between Summit Materials and Magnora ASA
Assuming the 90 days trading horizon Summit Materials is expected to generate 1.18 times less return on investment than Magnora ASA. But when comparing it to its historical volatility, Summit Materials Cl is 1.4 times less risky than Magnora ASA. It trades about 0.14 of its potential returns per unit of risk. Magnora ASA is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 2,300 in Magnora ASA on October 30, 2024 and sell it today you would earn a total of 325.00 from holding Magnora ASA or generate 14.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.39% |
| Values | Daily Returns |
Summit Materials Cl vs. Magnora ASA
Performance |
| Timeline |
| Summit Materials |
| Magnora ASA |
Summit Materials and Magnora ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Materials and Magnora ASA
The main advantage of trading using opposite Summit Materials and Magnora ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Materials position performs unexpectedly, Magnora ASA 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 Magnora ASA will offset losses from the drop in Magnora ASA's long position.| Summit Materials vs. URU Metals | Summit Materials vs. Europa Metals | Summit Materials vs. Jacquet Metal Service | Summit Materials vs. Cornish Metals |
| Magnora ASA vs. Austevoll Seafood ASA | Magnora ASA vs. Synchrony Financial | Magnora ASA vs. Raymond James Financial | Magnora ASA vs. Dairy Farm International |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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