Correlation Between Summit Materials and Atome Energy
Can any of the company-specific risk be diversified away by investing in both Summit Materials and Atome Energy 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 Atome Energy 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 Atome Energy PLC, you can compare the effects of market volatilities on Summit Materials and Atome Energy 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 Atome Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Materials and Atome Energy.
Diversification Opportunities for Summit Materials and Atome Energy
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Summit and Atome is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials Cl and Atome Energy PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atome Energy PLC 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 Atome Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atome Energy PLC has no effect on the direction of Summit Materials i.e., Summit Materials and Atome Energy go up and down completely randomly.
Pair Corralation between Summit Materials and Atome Energy
Assuming the 90 days trading horizon Summit Materials Cl is expected to generate 0.19 times more return on investment than Atome Energy. However, Summit Materials Cl is 5.26 times less risky than Atome Energy. It trades about 0.36 of its potential returns per unit of risk. Atome Energy PLC is currently generating about 0.01 per unit of risk. If you would invest 5,062 in Summit Materials Cl on October 26, 2024 and sell it today you would earn a total of 159.00 from holding Summit Materials Cl or generate 3.14% 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. Atome Energy PLC
Performance |
| Timeline |
| Summit Materials |
| Atome Energy PLC |
Summit Materials and Atome Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Materials and Atome Energy
The main advantage of trading using opposite Summit Materials and Atome Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Materials position performs unexpectedly, Atome Energy 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 Atome Energy will offset losses from the drop in Atome Energy's long position.| Summit Materials vs. Aeorema Communications Plc | Summit Materials vs. Atalaya Mining | Summit Materials vs. First Majestic Silver | Summit Materials vs. Verizon Communications |
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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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