Correlation Between Summit Materials and Heavitree Brewery
Can any of the company-specific risk be diversified away by investing in both Summit Materials and Heavitree Brewery 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 Heavitree Brewery 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 Heavitree Brewery, you can compare the effects of market volatilities on Summit Materials and Heavitree Brewery 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 Heavitree Brewery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Materials and Heavitree Brewery.
Diversification Opportunities for Summit Materials and Heavitree Brewery
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Summit and Heavitree is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials Cl and Heavitree Brewery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heavitree Brewery 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 Heavitree Brewery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heavitree Brewery has no effect on the direction of Summit Materials i.e., Summit Materials and Heavitree Brewery go up and down completely randomly.
Pair Corralation between Summit Materials and Heavitree Brewery
Assuming the 90 days trading horizon Summit Materials Cl is expected to generate 3.11 times more return on investment than Heavitree Brewery. However, Summit Materials is 3.11 times more volatile than Heavitree Brewery. It trades about 0.18 of its potential returns per unit of risk. Heavitree Brewery is currently generating about -0.22 per unit of risk. If you would invest 4,691 in Summit Materials Cl on September 3, 2024 and sell it today you would earn a total of 410.00 from holding Summit Materials Cl or generate 8.74% 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. Heavitree Brewery
Performance |
| Timeline |
| Summit Materials |
| Heavitree Brewery |
Summit Materials and Heavitree Brewery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Materials and Heavitree Brewery
The main advantage of trading using opposite Summit Materials and Heavitree Brewery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Materials position performs unexpectedly, Heavitree Brewery 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 Heavitree Brewery will offset losses from the drop in Heavitree Brewery's long position.| Summit Materials vs. Melia Hotels | Summit Materials vs. Gamma Communications PLC | Summit Materials vs. STMicroelectronics NV | Summit Materials vs. Cairo Communication SpA |
| Heavitree Brewery vs. Hochschild Mining plc | Heavitree Brewery vs. Cairn Homes PLC | Heavitree Brewery vs. United States Steel | Heavitree Brewery vs. Summit Materials Cl |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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