Correlation Between ARDAGH METAL and Summit Materials
Can any of the company-specific risk be diversified away by investing in both ARDAGH METAL 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 ARDAGH METAL and Summit Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ARDAGH METAL PACDL 0001 and Summit Materials, you can compare the effects of market volatilities on ARDAGH METAL 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 ARDAGH METAL with a short position of Summit Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARDAGH METAL and Summit Materials.
Diversification Opportunities for ARDAGH METAL and Summit Materials
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ARDAGH and Summit is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding ARDAGH METAL PACDL 0001 and Summit Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Materials and ARDAGH METAL 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 ARDAGH METAL PACDL 0001 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 ARDAGH METAL i.e., ARDAGH METAL and Summit Materials go up and down completely randomly.
Pair Corralation between ARDAGH METAL and Summit Materials
Assuming the 90 days horizon ARDAGH METAL PACDL 0001 is expected to under-perform the Summit Materials. In addition to that, ARDAGH METAL is 2.46 times more volatile than Summit Materials. It trades about -0.14 of its total potential returns per unit of risk. Summit Materials is currently generating about 0.17 per unit of volatility. If you would invest 4,600 in Summit Materials on October 16, 2024 and sell it today you would earn a total of 450.00 from holding Summit Materials or generate 9.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ARDAGH METAL PACDL 0001 vs. Summit Materials
Performance |
| Timeline |
| ARDAGH METAL PACDL |
| Summit Materials |
ARDAGH METAL and Summit Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ARDAGH METAL and Summit Materials
The main advantage of trading using opposite ARDAGH METAL and Summit Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARDAGH METAL 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.| ARDAGH METAL vs. PARKEN Sport Entertainment | ARDAGH METAL vs. Transport International Holdings | ARDAGH METAL vs. SPORTING | ARDAGH METAL vs. SCIENCE IN SPORT |
| Summit Materials vs. Harmony Gold Mining | Summit Materials vs. FIREWEED METALS P | Summit Materials vs. ARDAGH METAL PACDL 0001 | Summit Materials vs. Plastic Omnium |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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