Correlation Between Summit Materials and SLR Investment
Can any of the company-specific risk be diversified away by investing in both Summit Materials and SLR Investment 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 SLR Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Materials and SLR Investment Corp, you can compare the effects of market volatilities on Summit Materials and SLR Investment 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 SLR Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Materials and SLR Investment.
Diversification Opportunities for Summit Materials and SLR Investment
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Summit and SLR is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials and SLR Investment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SLR Investment Corp 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 SLR Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SLR Investment Corp has no effect on the direction of Summit Materials i.e., Summit Materials and SLR Investment go up and down completely randomly.
Pair Corralation between Summit Materials and SLR Investment
Assuming the 90 days trading horizon Summit Materials is expected to generate 2.09 times more return on investment than SLR Investment. However, Summit Materials is 2.09 times more volatile than SLR Investment Corp. It trades about 0.09 of its potential returns per unit of risk. SLR Investment Corp is currently generating about 0.11 per unit of risk. If you would invest 3,080 in Summit Materials on September 14, 2024 and sell it today you would earn a total of 1,760 from holding Summit Materials or generate 57.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Summit Materials vs. SLR Investment Corp
Performance |
| Timeline |
| Summit Materials |
| SLR Investment Corp |
Summit Materials and SLR Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Materials and SLR Investment
The main advantage of trading using opposite Summit Materials and SLR Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Materials position performs unexpectedly, SLR Investment 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 SLR Investment will offset losses from the drop in SLR Investment's long position.| Summit Materials vs. Apple Inc | Summit Materials vs. Apple Inc | Summit Materials vs. Apple Inc | Summit Materials vs. Apple Inc |
| SLR Investment vs. QBE Insurance Group | SLR Investment vs. Selective Insurance Group | SLR Investment vs. Summit Materials | SLR Investment vs. REVO INSURANCE SPA |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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