Correlation Between Aerofoam Metals and Summit Materials
Can any of the company-specific risk be diversified away by investing in both Aerofoam Metals and Summit Materials 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 Aerofoam Metals and Summit Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aerofoam Metals and Summit Materials, you can compare the effects of market volatilities on Aerofoam Metals and Summit Materials 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 Aerofoam Metals with a short position of Summit Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aerofoam Metals and Summit Materials.
Diversification Opportunities for Aerofoam Metals and Summit Materials
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Aerofoam and Summit is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Aerofoam Metals and Summit Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Materials and Aerofoam Metals 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 Aerofoam Metals are associated (or correlated) with Summit Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Materials has no effect on the direction of Aerofoam Metals i.e., Aerofoam Metals and Summit Materials go up and down completely randomly.
Pair Corralation between Aerofoam Metals and Summit Materials
If you would invest 3,445 in Summit Materials on August 24, 2024 and sell it today you would earn a total of 1,719 from holding Summit Materials or generate 49.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Aerofoam Metals vs. Summit Materials
Performance |
| Timeline |
| Aerofoam Metals |
| Summit Materials |
Aerofoam Metals and Summit Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aerofoam Metals and Summit Materials
The main advantage of trading using opposite Aerofoam Metals and Summit Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aerofoam Metals position performs unexpectedly, Summit Materials 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 Summit Materials will offset losses from the drop in Summit Materials' long position.| Aerofoam Metals vs. FitLife Brands, Common | Aerofoam Metals vs. HUMANA INC | Aerofoam Metals vs. SCOR PK | Aerofoam Metals vs. Aquagold International |
| Summit Materials vs. Martin Marietta Materials | Summit Materials vs. Vulcan Materials | Summit Materials vs. United States Lime | Summit Materials vs. James Hardie Industries |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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