Correlation Between Summit Materials and Volkswagen
Can any of the company-specific risk be diversified away by investing in both Summit Materials and Volkswagen 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 Volkswagen 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 Volkswagen AG, you can compare the effects of market volatilities on Summit Materials and Volkswagen 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 Volkswagen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Materials and Volkswagen.
Diversification Opportunities for Summit Materials and Volkswagen
-0.86 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Summit and Volkswagen is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials Cl and Volkswagen AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volkswagen AG 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 Volkswagen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Volkswagen AG has no effect on the direction of Summit Materials i.e., Summit Materials and Volkswagen go up and down completely randomly.
Pair Corralation between Summit Materials and Volkswagen
Assuming the 90 days trading horizon Summit Materials is expected to generate 9.79 times less return on investment than Volkswagen. But when comparing it to its historical volatility, Summit Materials Cl is 6.52 times less risky than Volkswagen. It trades about 0.08 of its potential returns per unit of risk. Volkswagen AG is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 8,630 in Volkswagen AG on October 7, 2024 and sell it today you would earn a total of 275.00 from holding Volkswagen AG or generate 3.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Summit Materials Cl vs. Volkswagen AG
Performance |
| Timeline |
| Summit Materials |
| Volkswagen AG |
Summit Materials and Volkswagen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Materials and Volkswagen
The main advantage of trading using opposite Summit Materials and Volkswagen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Materials position performs unexpectedly, Volkswagen 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 Volkswagen will offset losses from the drop in Volkswagen's long position.| Summit Materials vs. Uniper SE | Summit Materials vs. Codex Acquisitions PLC | Summit Materials vs. Ikigai Ventures | Summit Materials vs. Heavitree Brewery |
| Volkswagen vs. Clean Power Hydrogen | Volkswagen vs. Vitec Software Group | Volkswagen vs. Take Two Interactive Software | Volkswagen vs. Pfeiffer Vacuum Technology |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios |