Correlation Between Summit Materials and Compagnie Plastic
Can any of the company-specific risk be diversified away by investing in both Summit Materials and Compagnie Plastic 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 Compagnie Plastic 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 Compagnie Plastic Omnium, you can compare the effects of market volatilities on Summit Materials and Compagnie Plastic 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 Compagnie Plastic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Materials and Compagnie Plastic.
Diversification Opportunities for Summit Materials and Compagnie Plastic
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Summit and Compagnie is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials Cl and Compagnie Plastic Omnium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie Plastic Omnium 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 Compagnie Plastic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie Plastic Omnium has no effect on the direction of Summit Materials i.e., Summit Materials and Compagnie Plastic go up and down completely randomly.
Pair Corralation between Summit Materials and Compagnie Plastic
Assuming the 90 days trading horizon Summit Materials Cl is expected to generate 0.92 times more return on investment than Compagnie Plastic. However, Summit Materials Cl is 1.09 times less risky than Compagnie Plastic. It trades about 0.24 of its potential returns per unit of risk. Compagnie Plastic Omnium is currently generating about -0.06 per unit of risk. If you would invest 3,897 in Summit Materials Cl on August 30, 2024 and sell it today you would earn a total of 1,195 from holding Summit Materials Cl or generate 30.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Summit Materials Cl vs. Compagnie Plastic Omnium
Performance |
| Timeline |
| Summit Materials |
| Compagnie Plastic Omnium |
Summit Materials and Compagnie Plastic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Materials and Compagnie Plastic
The main advantage of trading using opposite Summit Materials and Compagnie Plastic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Materials position performs unexpectedly, Compagnie Plastic 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 Compagnie Plastic will offset losses from the drop in Compagnie Plastic's long position.| Summit Materials vs. Tungsten West PLC | Summit Materials vs. Argo Group Limited | Summit Materials vs. Hardide PLC | Summit Materials vs. Versarien PLC |
| Compagnie Plastic vs. Tungsten West PLC | Compagnie Plastic vs. Argo Group Limited | Compagnie Plastic vs. Hardide PLC | Compagnie Plastic vs. Versarien PLC |
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 CEOs Directory module to screen CEOs from public companies around the world.
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