Correlation Between Summit Materials and Ashtead Technology
Can any of the company-specific risk be diversified away by investing in both Summit Materials and Ashtead Technology 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 Ashtead Technology 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 Ashtead Technology Holdings, you can compare the effects of market volatilities on Summit Materials and Ashtead Technology 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 Ashtead Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Materials and Ashtead Technology.
Diversification Opportunities for Summit Materials and Ashtead Technology
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Summit and Ashtead is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials Cl and Ashtead Technology Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ashtead Technology 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 Ashtead Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ashtead Technology has no effect on the direction of Summit Materials i.e., Summit Materials and Ashtead Technology go up and down completely randomly.
Pair Corralation between Summit Materials and Ashtead Technology
Assuming the 90 days trading horizon Summit Materials Cl is expected to generate 0.79 times more return on investment than Ashtead Technology. However, Summit Materials Cl is 1.27 times less risky than Ashtead Technology. It trades about 0.16 of its potential returns per unit of risk. Ashtead Technology Holdings is currently generating about -0.08 per unit of risk. If you would invest 3,999 in Summit Materials Cl on September 2, 2024 and sell it today you would earn a total of 1,102 from holding Summit Materials Cl or generate 27.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Summit Materials Cl vs. Ashtead Technology Holdings
Performance |
| Timeline |
| Summit Materials |
| Ashtead Technology |
Summit Materials and Ashtead Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Materials and Ashtead Technology
The main advantage of trading using opposite Summit Materials and Ashtead Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Materials position performs unexpectedly, Ashtead Technology 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 Ashtead Technology will offset losses from the drop in Ashtead Technology's long position.| Summit Materials vs. Uniper SE | Summit Materials vs. Mulberry Group PLC | Summit Materials vs. London Security Plc | Summit Materials vs. Triad Group PLC |
| Ashtead Technology vs. Zoom Video Communications | Ashtead Technology vs. Enbridge | Ashtead Technology vs. Endo International PLC | Ashtead Technology vs. Diversified Energy |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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