Correlation Between Summit Materials and T.J. Maxx
Can any of the company-specific risk be diversified away by investing in both Summit Materials and T.J. Maxx 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 T.J. Maxx into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Materials and The TJX Companies, you can compare the effects of market volatilities on Summit Materials and T.J. Maxx 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 T.J. Maxx. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Materials and T.J. Maxx.
Diversification Opportunities for Summit Materials and T.J. Maxx
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Summit and T.J. is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials and The TJX Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TJX Companies 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 T.J. Maxx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TJX Companies has no effect on the direction of Summit Materials i.e., Summit Materials and T.J. Maxx go up and down completely randomly.
Pair Corralation between Summit Materials and T.J. Maxx
Assuming the 90 days trading horizon Summit Materials is expected to generate 0.52 times more return on investment than T.J. Maxx. However, Summit Materials is 1.92 times less risky than T.J. Maxx. It trades about 0.22 of its potential returns per unit of risk. The TJX Companies is currently generating about -0.01 per unit of risk. If you would invest 4,980 in Summit Materials on November 28, 2024 and sell it today you would earn a total of 70.00 from holding Summit Materials or generate 1.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 56.52% |
| Values | Daily Returns |
Summit Materials vs. The TJX Companies
Performance |
| Timeline |
| Summit Materials |
Risk-Adjusted Performance
OK
Weak | Strong |
| TJX Companies |
Summit Materials and T.J. Maxx Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Materials and T.J. Maxx
The main advantage of trading using opposite Summit Materials and T.J. Maxx positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Materials position performs unexpectedly, T.J. Maxx 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 T.J. Maxx will offset losses from the drop in T.J. Maxx's long position.| Summit Materials vs. X FAB Silicon Foundries | Summit Materials vs. Broadridge Financial Solutions | Summit Materials vs. Television Broadcasts Limited | Summit Materials vs. Kaufman Broad SA |
| T.J. Maxx vs. AEON METALS LTD | T.J. Maxx vs. Sportsmans Warehouse Holdings | T.J. Maxx vs. Bumrungrad Hospital PCL | T.J. Maxx vs. DAIDO METAL TD |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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