Correlation Between Cembra Money and Summit Materials
Can any of the company-specific risk be diversified away by investing in both Cembra Money and Summit Materials 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 Cembra Money and Summit Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cembra Money Bank and Summit Materials Cl, you can compare the effects of market volatilities on Cembra Money and Summit Materials 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 Cembra Money with a short position of Summit Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cembra Money and Summit Materials.
Diversification Opportunities for Cembra Money and Summit Materials
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cembra and Summit is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Cembra Money Bank and Summit Materials Cl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Materials and Cembra Money 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 Cembra Money Bank are associated (or correlated) with Summit Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Materials has no effect on the direction of Cembra Money i.e., Cembra Money and Summit Materials go up and down completely randomly.
Pair Corralation between Cembra Money and Summit Materials
Assuming the 90 days trading horizon Cembra Money is expected to generate 2.43 times less return on investment than Summit Materials. But when comparing it to its historical volatility, Cembra Money Bank is 2.94 times less risky than Summit Materials. It trades about 0.17 of its potential returns per unit of risk. Summit Materials Cl is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 4,776 in Summit Materials Cl on September 2, 2024 and sell it today you would earn a total of 325.00 from holding Summit Materials Cl or generate 6.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cembra Money Bank vs. Summit Materials Cl
Performance |
| Timeline |
| Cembra Money Bank |
| Summit Materials |
Cembra Money and Summit Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cembra Money and Summit Materials
The main advantage of trading using opposite Cembra Money and Summit Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cembra Money position performs unexpectedly, Summit Materials 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 Summit Materials will offset losses from the drop in Summit Materials' long position.| Cembra Money vs. Uniper SE | Cembra Money vs. Mulberry Group PLC | Cembra Money vs. London Security Plc | Cembra Money vs. Triad Group PLC |
| Summit Materials vs. Uniper SE | Summit Materials vs. Mulberry Group PLC | Summit Materials vs. London Security Plc | Summit Materials vs. Triad Group PLC |
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 Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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