Correlation Between MEDICAL FACILITIES and Summit Materials
Can any of the company-specific risk be diversified away by investing in both MEDICAL FACILITIES 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 MEDICAL FACILITIES and Summit Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MEDICAL FACILITIES NEW and Summit Materials, you can compare the effects of market volatilities on MEDICAL FACILITIES 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 MEDICAL FACILITIES with a short position of Summit Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of MEDICAL FACILITIES and Summit Materials.
Diversification Opportunities for MEDICAL FACILITIES and Summit Materials
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between MEDICAL and Summit is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding MEDICAL FACILITIES NEW and Summit Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Materials and MEDICAL FACILITIES 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 MEDICAL FACILITIES NEW 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 MEDICAL FACILITIES i.e., MEDICAL FACILITIES and Summit Materials go up and down completely randomly.
Pair Corralation between MEDICAL FACILITIES and Summit Materials
Assuming the 90 days horizon MEDICAL FACILITIES NEW is expected to generate 1.18 times more return on investment than Summit Materials. However, MEDICAL FACILITIES is 1.18 times more volatile than Summit Materials. It trades about 0.07 of its potential returns per unit of risk. Summit Materials is currently generating about 0.06 per unit of risk. If you would invest 513.00 in MEDICAL FACILITIES NEW on October 13, 2024 and sell it today you would earn a total of 537.00 from holding MEDICAL FACILITIES NEW or generate 104.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
MEDICAL FACILITIES NEW vs. Summit Materials
Performance |
| Timeline |
| MEDICAL FACILITIES NEW |
| Summit Materials |
MEDICAL FACILITIES and Summit Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MEDICAL FACILITIES and Summit Materials
The main advantage of trading using opposite MEDICAL FACILITIES and Summit Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MEDICAL FACILITIES 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.| MEDICAL FACILITIES vs. Universal Health Services | MEDICAL FACILITIES vs. Superior Plus Corp | MEDICAL FACILITIES vs. NMI Holdings | MEDICAL FACILITIES vs. SIVERS SEMICONDUCTORS AB |
| Summit Materials vs. Townsquare Media | Summit Materials vs. SQUIRREL MEDIA SA | Summit Materials vs. MEDICAL FACILITIES NEW | Summit Materials vs. Diamyd Medical AB |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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