Correlation Between Summit Materials and FAST RETAIL
Can any of the company-specific risk be diversified away by investing in both Summit Materials and FAST RETAIL 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 FAST RETAIL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Materials and FAST RETAIL ADR, you can compare the effects of market volatilities on Summit Materials and FAST RETAIL 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 FAST RETAIL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Materials and FAST RETAIL.
Diversification Opportunities for Summit Materials and FAST RETAIL
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Summit and FAST is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials and FAST RETAIL ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FAST RETAIL ADR 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 FAST RETAIL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FAST RETAIL ADR has no effect on the direction of Summit Materials i.e., Summit Materials and FAST RETAIL go up and down completely randomly.
Pair Corralation between Summit Materials and FAST RETAIL
Assuming the 90 days trading horizon Summit Materials is expected to generate 1.05 times more return on investment than FAST RETAIL. However, Summit Materials is 1.05 times more volatile than FAST RETAIL ADR. It trades about 0.09 of its potential returns per unit of risk. FAST RETAIL ADR is currently generating about 0.06 per unit of risk. If you would invest 3,160 in Summit Materials on August 26, 2024 and sell it today you would earn a total of 1,760 from holding Summit Materials or generate 55.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Summit Materials vs. FAST RETAIL ADR
Performance |
| Timeline |
| Summit Materials |
| FAST RETAIL ADR |
Summit Materials and FAST RETAIL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Materials and FAST RETAIL
The main advantage of trading using opposite Summit Materials and FAST RETAIL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Materials position performs unexpectedly, FAST RETAIL 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 FAST RETAIL will offset losses from the drop in FAST RETAIL's long position.| Summit Materials vs. Apple Inc | Summit Materials vs. Apple Inc | Summit Materials vs. Apple Inc | Summit Materials vs. Apple Inc |
| FAST RETAIL vs. CHEMICAL INDUSTRIES | FAST RETAIL vs. TIANDE CHEMICAL | FAST RETAIL vs. Data3 Limited | FAST RETAIL vs. Soken Chemical Engineering |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
Other Complementary Tools
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments |