Correlation Between Summit Materials and Advanced Medical
Can any of the company-specific risk be diversified away by investing in both Summit Materials and Advanced Medical 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 Advanced Medical 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 Advanced Medical Solutions, you can compare the effects of market volatilities on Summit Materials and Advanced Medical 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 Advanced Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Materials and Advanced Medical.
Diversification Opportunities for Summit Materials and Advanced Medical
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Summit and Advanced is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials Cl and Advanced Medical Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Medical Sol 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 Advanced Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Medical Sol has no effect on the direction of Summit Materials i.e., Summit Materials and Advanced Medical go up and down completely randomly.
Pair Corralation between Summit Materials and Advanced Medical
Assuming the 90 days trading horizon Summit Materials Cl is expected to generate 0.69 times more return on investment than Advanced Medical. However, Summit Materials Cl is 1.45 times less risky than Advanced Medical. It trades about 0.13 of its potential returns per unit of risk. Advanced Medical Solutions is currently generating about -0.01 per unit of risk. If you would invest 3,814 in Summit Materials Cl on November 4, 2024 and sell it today you would earn a total of 1,422 from holding Summit Materials Cl or generate 37.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Summit Materials Cl vs. Advanced Medical Solutions
Performance |
| Timeline |
| Summit Materials |
| Advanced Medical Sol |
Summit Materials and Advanced Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Materials and Advanced Medical
The main advantage of trading using opposite Summit Materials and Advanced Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Materials position performs unexpectedly, Advanced Medical 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 Advanced Medical will offset losses from the drop in Advanced Medical's long position.| Summit Materials vs. Cornish Metals | Summit Materials vs. Alaska Air Group | Summit Materials vs. GreenX Metals | Summit Materials vs. Porvair plc |
| Advanced Medical vs. Cornish Metals | Advanced Medical vs. Europa Metals | Advanced Medical vs. Capital Metals PLC | Advanced Medical vs. Fulcrum Metals 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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