Correlation Between Summit Materials and DiaSorin SpA
Can any of the company-specific risk be diversified away by investing in both Summit Materials and DiaSorin SpA 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 DiaSorin SpA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Materials and DiaSorin SpA, you can compare the effects of market volatilities on Summit Materials and DiaSorin SpA 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 DiaSorin SpA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Materials and DiaSorin SpA.
Diversification Opportunities for Summit Materials and DiaSorin SpA
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Summit and DiaSorin is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials and DiaSorin SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DiaSorin SpA 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 DiaSorin SpA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DiaSorin SpA has no effect on the direction of Summit Materials i.e., Summit Materials and DiaSorin SpA go up and down completely randomly.
Pair Corralation between Summit Materials and DiaSorin SpA
Assuming the 90 days trading horizon Summit Materials is expected to generate 1.56 times more return on investment than DiaSorin SpA. However, Summit Materials is 1.56 times more volatile than DiaSorin SpA. It trades about 0.11 of its potential returns per unit of risk. DiaSorin SpA is currently generating about 0.03 per unit of risk. If you would invest 3,560 in Summit Materials on August 29, 2024 and sell it today you would earn a total of 1,260 from holding Summit Materials or generate 35.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Summit Materials vs. DiaSorin SpA
Performance |
| Timeline |
| Summit Materials |
| DiaSorin SpA |
Summit Materials and DiaSorin SpA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Materials and DiaSorin SpA
The main advantage of trading using opposite Summit Materials and DiaSorin SpA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Materials position performs unexpectedly, DiaSorin SpA 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 DiaSorin SpA will offset losses from the drop in DiaSorin SpA's long position.| Summit Materials vs. FAST RETAIL ADR | Summit Materials vs. Burlington Stores | Summit Materials vs. National Retail Properties | Summit Materials vs. Singapore Airlines Limited |
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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