Correlation Between Summit Materials and Canadian General
Can any of the company-specific risk be diversified away by investing in both Summit Materials and Canadian General 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 Canadian General 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 Canadian General Investments, you can compare the effects of market volatilities on Summit Materials and Canadian General 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 Canadian General. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Materials and Canadian General.
Diversification Opportunities for Summit Materials and Canadian General
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Summit and Canadian is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials Cl and Canadian General Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian General Inv 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 Canadian General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian General Inv has no effect on the direction of Summit Materials i.e., Summit Materials and Canadian General go up and down completely randomly.
Pair Corralation between Summit Materials and Canadian General
Assuming the 90 days trading horizon Summit Materials Cl is expected to generate 0.56 times more return on investment than Canadian General. However, Summit Materials Cl is 1.77 times less risky than Canadian General. It trades about 0.26 of its potential returns per unit of risk. Canadian General Investments is currently generating about -0.22 per unit of risk. If you would invest 5,090 in Summit Materials Cl on October 13, 2024 and sell it today you would earn a total of 124.00 from holding Summit Materials Cl or generate 2.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Summit Materials Cl vs. Canadian General Investments
Performance |
| Timeline |
| Summit Materials |
| Canadian General Inv |
Summit Materials and Canadian General Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Materials and Canadian General
The main advantage of trading using opposite Summit Materials and Canadian General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Materials position performs unexpectedly, Canadian General 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 Canadian General will offset losses from the drop in Canadian General's long position.| Summit Materials vs. Golden Metal Resources | Summit Materials vs. Panther Metals PLC | Summit Materials vs. Thor Mining PLC | Summit Materials vs. Zegona Communications Plc |
| Canadian General vs. Fonix Mobile plc | Canadian General vs. Fevertree Drinks Plc | Canadian General vs. Summit Materials Cl | Canadian General vs. Martin Marietta Materials |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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