Correlation Between Summit Materials and Ignitis Grupe
Can any of the company-specific risk be diversified away by investing in both Summit Materials and Ignitis Grupe 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 Ignitis Grupe 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 Ignitis Grupe AB, you can compare the effects of market volatilities on Summit Materials and Ignitis Grupe 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 Ignitis Grupe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Materials and Ignitis Grupe.
Diversification Opportunities for Summit Materials and Ignitis Grupe
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Summit and Ignitis is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials Cl and Ignitis Grupe AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ignitis Grupe AB 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 Ignitis Grupe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ignitis Grupe AB has no effect on the direction of Summit Materials i.e., Summit Materials and Ignitis Grupe go up and down completely randomly.
Pair Corralation between Summit Materials and Ignitis Grupe
Assuming the 90 days trading horizon Summit Materials is expected to generate 3.27 times less return on investment than Ignitis Grupe. In addition to that, Summit Materials is 1.76 times more volatile than Ignitis Grupe AB. It trades about 0.02 of its total potential returns per unit of risk. Ignitis Grupe AB is currently generating about 0.09 per unit of volatility. If you would invest 1,890 in Ignitis Grupe AB on September 12, 2024 and sell it today you would earn a total of 40.00 from holding Ignitis Grupe AB or generate 2.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Summit Materials Cl vs. Ignitis Grupe AB
Performance |
| Timeline |
| Summit Materials |
| Ignitis Grupe AB |
Summit Materials and Ignitis Grupe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Materials and Ignitis Grupe
The main advantage of trading using opposite Summit Materials and Ignitis Grupe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Materials position performs unexpectedly, Ignitis Grupe 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 Ignitis Grupe will offset losses from the drop in Ignitis Grupe's long position.| Summit Materials vs. Hong Kong Land | Summit Materials vs. Neometals | Summit Materials vs. Coor Service Management | Summit Materials vs. Fidelity Sustainable USD |
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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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