Correlation Between Summit Materials and Axway Software
Can any of the company-specific risk be diversified away by investing in both Summit Materials and Axway Software 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 Axway Software into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Materials and Axway Software SA, you can compare the effects of market volatilities on Summit Materials and Axway Software 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 Axway Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Materials and Axway Software.
Diversification Opportunities for Summit Materials and Axway Software
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Summit and Axway is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials and Axway Software SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axway Software SA 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 are associated (or correlated) with Axway Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axway Software SA has no effect on the direction of Summit Materials i.e., Summit Materials and Axway Software go up and down completely randomly.
Pair Corralation between Summit Materials and Axway Software
Assuming the 90 days trading horizon Summit Materials is expected to generate 1.34 times more return on investment than Axway Software. However, Summit Materials is 1.34 times more volatile than Axway Software SA. It trades about 0.18 of its potential returns per unit of risk. Axway Software SA is currently generating about -0.07 per unit of risk. If you would invest 4,580 in Summit Materials on October 19, 2024 and sell it today you would earn a total of 470.00 from holding Summit Materials or generate 10.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Summit Materials vs. Axway Software SA
Performance |
| Timeline |
| Summit Materials |
| Axway Software SA |
Summit Materials and Axway Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Materials and Axway Software
The main advantage of trading using opposite Summit Materials and Axway Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Materials position performs unexpectedly, Axway Software 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 Axway Software will offset losses from the drop in Axway Software's long position.| Summit Materials vs. CVW CLEANTECH INC | Summit Materials vs. Singapore Telecommunications Limited | Summit Materials vs. Air Lease | Summit Materials vs. Comba Telecom Systems |
| Axway Software vs. GOODYEAR T RUBBER | Axway Software vs. Summit Materials | Axway Software vs. Rayonier Advanced Materials | Axway Software vs. VULCAN MATERIALS |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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