Correlation Between Summit Materials and Bilfinger
Can any of the company-specific risk be diversified away by investing in both Summit Materials and Bilfinger 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 Bilfinger into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Materials and Bilfinger SE, you can compare the effects of market volatilities on Summit Materials and Bilfinger 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 Bilfinger. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Materials and Bilfinger.
Diversification Opportunities for Summit Materials and Bilfinger
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Summit and Bilfinger is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials and Bilfinger SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bilfinger SE 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 Bilfinger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bilfinger SE has no effect on the direction of Summit Materials i.e., Summit Materials and Bilfinger go up and down completely randomly.
Pair Corralation between Summit Materials and Bilfinger
Assuming the 90 days trading horizon Summit Materials is expected to generate 1.19 times more return on investment than Bilfinger. However, Summit Materials is 1.19 times more volatile than Bilfinger SE. It trades about 0.3 of its potential returns per unit of risk. Bilfinger SE is currently generating about -0.04 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 Against |
| Strength | Weak |
| Accuracy | 97.73% |
| Values | Daily Returns |
Summit Materials vs. Bilfinger SE
Performance |
| Timeline |
| Summit Materials |
| Bilfinger SE |
Summit Materials and Bilfinger Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Materials and Bilfinger
The main advantage of trading using opposite Summit Materials and Bilfinger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Materials position performs unexpectedly, Bilfinger 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 Bilfinger will offset losses from the drop in Bilfinger's long position.| Summit Materials vs. Apple Inc | Summit Materials vs. Apple Inc | Summit Materials vs. Apple Inc | Summit Materials vs. Apple Inc |
| Bilfinger vs. Sumitomo Rubber Industries | Bilfinger vs. Summit Materials | Bilfinger vs. Eagle Materials | Bilfinger vs. Mitsubishi 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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