Correlation Between Summit Materials and Walmart
Can any of the company-specific risk be diversified away by investing in both Summit Materials and Walmart 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 Walmart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Materials and Walmart, you can compare the effects of market volatilities on Summit Materials and Walmart 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 Walmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Materials and Walmart.
Diversification Opportunities for Summit Materials and Walmart
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Summit and Walmart is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials and Walmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walmart 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 Walmart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walmart has no effect on the direction of Summit Materials i.e., Summit Materials and Walmart go up and down completely randomly.
Pair Corralation between Summit Materials and Walmart
Assuming the 90 days trading horizon Summit Materials is expected to generate 0.72 times more return on investment than Walmart. However, Summit Materials is 1.39 times less risky than Walmart. It trades about 0.19 of its potential returns per unit of risk. Walmart is currently generating about 0.02 per unit of risk. If you would invest 4,840 in Summit Materials on October 13, 2024 and sell it today you would earn a total of 160.00 from holding Summit Materials or generate 3.31% 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. Walmart
Performance |
| Timeline |
| Summit Materials |
| Walmart |
Summit Materials and Walmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Materials and Walmart
The main advantage of trading using opposite Summit Materials and Walmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Materials position performs unexpectedly, Walmart 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 Walmart will offset losses from the drop in Walmart's long position.| Summit Materials vs. Townsquare Media | Summit Materials vs. SQUIRREL MEDIA SA | Summit Materials vs. MEDICAL FACILITIES NEW | Summit Materials vs. Diamyd Medical AB |
| Walmart vs. PENN Entertainment | Walmart vs. Beta Systems Software | Walmart vs. UPDATE SOFTWARE | Walmart vs. Ubisoft Entertainment SA |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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