Correlation Between Summit Materials and FIRST SHIP
Can any of the company-specific risk be diversified away by investing in both Summit Materials and FIRST SHIP 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 FIRST SHIP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Materials and FIRST SHIP LEASE, you can compare the effects of market volatilities on Summit Materials and FIRST SHIP 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 FIRST SHIP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Materials and FIRST SHIP.
Diversification Opportunities for Summit Materials and FIRST SHIP
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Summit and FIRST is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials and FIRST SHIP LEASE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FIRST SHIP LEASE 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 FIRST SHIP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FIRST SHIP LEASE has no effect on the direction of Summit Materials i.e., Summit Materials and FIRST SHIP go up and down completely randomly.
Pair Corralation between Summit Materials and FIRST SHIP
Assuming the 90 days trading horizon Summit Materials is expected to generate 0.4 times more return on investment than FIRST SHIP. However, Summit Materials is 2.47 times less risky than FIRST SHIP. It trades about 0.08 of its potential returns per unit of risk. FIRST SHIP LEASE is currently generating about -0.02 per unit of risk. If you would invest 4,940 in Summit Materials on November 3, 2024 and sell it today you would earn a total of 60.00 from holding Summit Materials or generate 1.21% 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. FIRST SHIP LEASE
Performance |
| Timeline |
| Summit Materials |
| FIRST SHIP LEASE |
Summit Materials and FIRST SHIP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Materials and FIRST SHIP
The main advantage of trading using opposite Summit Materials and FIRST SHIP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Materials position performs unexpectedly, FIRST SHIP 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 FIRST SHIP will offset losses from the drop in FIRST SHIP's long position.| Summit Materials vs. SIVERS SEMICONDUCTORS AB | Summit Materials vs. NorAm Drilling AS | Summit Materials vs. Volkswagen AG | Summit Materials vs. Darden Restaurants |
| FIRST SHIP vs. BROADSTNET LEADL 00025 | FIRST SHIP vs. ADRIATIC METALS LS 013355 | FIRST SHIP vs. MAGNUM MINING EXP | FIRST SHIP vs. Yuexiu Transport Infrastructure |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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