Correlation Between Summit Materials and SupplyMe Capital
Can any of the company-specific risk be diversified away by investing in both Summit Materials and SupplyMe Capital 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 SupplyMe Capital 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 SupplyMe Capital PLC, you can compare the effects of market volatilities on Summit Materials and SupplyMe Capital 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 SupplyMe Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Materials and SupplyMe Capital.
Diversification Opportunities for Summit Materials and SupplyMe Capital
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Summit and SupplyMe is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials Cl and SupplyMe Capital PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SupplyMe Capital 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 SupplyMe Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SupplyMe Capital PLC has no effect on the direction of Summit Materials i.e., Summit Materials and SupplyMe Capital go up and down completely randomly.
Pair Corralation between Summit Materials and SupplyMe Capital
Assuming the 90 days trading horizon Summit Materials Cl is expected to generate 0.23 times more return on investment than SupplyMe Capital. However, Summit Materials Cl is 4.33 times less risky than SupplyMe Capital. It trades about 0.16 of its potential returns per unit of risk. SupplyMe Capital PLC is currently generating about -0.08 per unit of risk. If you would invest 3,999 in Summit Materials Cl on September 2, 2024 and sell it today you would earn a total of 1,102 from holding Summit Materials Cl or generate 27.56% 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. SupplyMe Capital PLC
Performance |
| Timeline |
| Summit Materials |
| SupplyMe Capital PLC |
Summit Materials and SupplyMe Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Materials and SupplyMe Capital
The main advantage of trading using opposite Summit Materials and SupplyMe Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Materials position performs unexpectedly, SupplyMe Capital 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 SupplyMe Capital will offset losses from the drop in SupplyMe Capital's long position.| Summit Materials vs. Uniper SE | Summit Materials vs. Mulberry Group PLC | Summit Materials vs. London Security Plc | Summit Materials vs. Triad Group PLC |
| SupplyMe Capital vs. Lloyds Banking Group | SupplyMe Capital vs. Premier African Minerals | SupplyMe Capital vs. SANTANDER UK 8 | SupplyMe Capital vs. 88 Energy |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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