Correlation Between Summit Materials and PKSHA TECHNOLOGY
Can any of the company-specific risk be diversified away by investing in both Summit Materials and PKSHA TECHNOLOGY 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 PKSHA TECHNOLOGY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Materials and PKSHA TECHNOLOGY INC, you can compare the effects of market volatilities on Summit Materials and PKSHA TECHNOLOGY 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 PKSHA TECHNOLOGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Materials and PKSHA TECHNOLOGY.
Diversification Opportunities for Summit Materials and PKSHA TECHNOLOGY
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Summit and PKSHA is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials and PKSHA TECHNOLOGY INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PKSHA TECHNOLOGY INC 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 PKSHA TECHNOLOGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PKSHA TECHNOLOGY INC has no effect on the direction of Summit Materials i.e., Summit Materials and PKSHA TECHNOLOGY go up and down completely randomly.
Pair Corralation between Summit Materials and PKSHA TECHNOLOGY
Assuming the 90 days trading horizon Summit Materials is expected to generate 0.78 times more return on investment than PKSHA TECHNOLOGY. However, Summit Materials is 1.28 times less risky than PKSHA TECHNOLOGY. It trades about 0.3 of its potential returns per unit of risk. PKSHA TECHNOLOGY INC is currently generating about 0.11 per unit of risk. If you would invest 3,480 in Summit Materials on September 13, 2024 and sell it today you would earn a total of 1,360 from holding Summit Materials or generate 39.08% 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. PKSHA TECHNOLOGY INC
Performance |
| Timeline |
| Summit Materials |
| PKSHA TECHNOLOGY INC |
Summit Materials and PKSHA TECHNOLOGY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Materials and PKSHA TECHNOLOGY
The main advantage of trading using opposite Summit Materials and PKSHA TECHNOLOGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Materials position performs unexpectedly, PKSHA TECHNOLOGY 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 PKSHA TECHNOLOGY will offset losses from the drop in PKSHA TECHNOLOGY's long position.| Summit Materials vs. Apple Inc | Summit Materials vs. Apple Inc | Summit Materials vs. Apple Inc | Summit Materials vs. Apple Inc |
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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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