Correlation Between Summit Materials and GreenX Metals
Can any of the company-specific risk be diversified away by investing in both Summit Materials and GreenX Metals 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 GreenX Metals 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 GreenX Metals, you can compare the effects of market volatilities on Summit Materials and GreenX Metals 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 GreenX Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Materials and GreenX Metals.
Diversification Opportunities for Summit Materials and GreenX Metals
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Summit and GreenX is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials Cl and GreenX Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GreenX Metals 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 GreenX Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GreenX Metals has no effect on the direction of Summit Materials i.e., Summit Materials and GreenX Metals go up and down completely randomly.
Pair Corralation between Summit Materials and GreenX Metals
Assuming the 90 days trading horizon Summit Materials Cl is expected to generate 0.75 times more return on investment than GreenX Metals. However, Summit Materials Cl is 1.33 times less risky than GreenX Metals. It trades about 0.17 of its potential returns per unit of risk. GreenX Metals is currently generating about -0.02 per unit of risk. If you would invest 4,793 in Summit Materials Cl on September 20, 2024 and sell it today you would earn a total of 285.00 from holding Summit Materials Cl or generate 5.95% 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. GreenX Metals
Performance |
| Timeline |
| Summit Materials |
| GreenX Metals |
Summit Materials and GreenX Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Materials and GreenX Metals
The main advantage of trading using opposite Summit Materials and GreenX Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Materials position performs unexpectedly, GreenX Metals 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 GreenX Metals will offset losses from the drop in GreenX Metals' long position.| Summit Materials vs. Samsung Electronics Co | Summit Materials vs. Samsung Electronics Co | Summit Materials vs. Hyundai Motor | Summit Materials vs. Reliance Industries Ltd |
| GreenX Metals vs. Givaudan SA | GreenX Metals vs. Antofagasta PLC | GreenX Metals vs. Ferrexpo PLC | GreenX Metals vs. Atalaya Mining |
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 Correlations module to find global opportunities by holding instruments from different markets.
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