Correlation Between Summit Materials and LIFENET INSURANCE
Can any of the company-specific risk be diversified away by investing in both Summit Materials and LIFENET INSURANCE 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 LIFENET INSURANCE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Materials and LIFENET INSURANCE CO, you can compare the effects of market volatilities on Summit Materials and LIFENET INSURANCE 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 LIFENET INSURANCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Materials and LIFENET INSURANCE.
Diversification Opportunities for Summit Materials and LIFENET INSURANCE
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Summit and LIFENET is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials and LIFENET INSURANCE CO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LIFENET INSURANCE 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 LIFENET INSURANCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LIFENET INSURANCE has no effect on the direction of Summit Materials i.e., Summit Materials and LIFENET INSURANCE go up and down completely randomly.
Pair Corralation between Summit Materials and LIFENET INSURANCE
Assuming the 90 days trading horizon Summit Materials is expected to generate 1.36 times less return on investment than LIFENET INSURANCE. But when comparing it to its historical volatility, Summit Materials is 1.19 times less risky than LIFENET INSURANCE. It trades about 0.07 of its potential returns per unit of risk. LIFENET INSURANCE CO is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 720.00 in LIFENET INSURANCE CO on September 20, 2024 and sell it today you would earn a total of 390.00 from holding LIFENET INSURANCE CO or generate 54.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Summit Materials vs. LIFENET INSURANCE CO
Performance |
| Timeline |
| Summit Materials |
| LIFENET INSURANCE |
Summit Materials and LIFENET INSURANCE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Materials and LIFENET INSURANCE
The main advantage of trading using opposite Summit Materials and LIFENET INSURANCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Materials position performs unexpectedly, LIFENET INSURANCE 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 LIFENET INSURANCE will offset losses from the drop in LIFENET INSURANCE's long position.| Summit Materials vs. Apple Inc | Summit Materials vs. Apple Inc | Summit Materials vs. Apple Inc | Summit Materials vs. Apple Inc |
| LIFENET INSURANCE vs. Xtrackers LevDAX | LIFENET INSURANCE vs. Lyxor 1 | LIFENET INSURANCE vs. Xtrackers ShortDAX |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
Other Complementary Tools
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios |