Correlation Between Aldel Financial and Summit Materials
Can any of the company-specific risk be diversified away by investing in both Aldel Financial 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 Aldel Financial and Summit Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aldel Financial II and Summit Materials, you can compare the effects of market volatilities on Aldel Financial 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 Aldel Financial with a short position of Summit Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aldel Financial and Summit Materials.
Diversification Opportunities for Aldel Financial and Summit Materials
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Aldel and Summit is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Aldel Financial II and Summit Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Materials and Aldel Financial 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 Aldel Financial II 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 Aldel Financial i.e., Aldel Financial and Summit Materials go up and down completely randomly.
Pair Corralation between Aldel Financial and Summit Materials
Assuming the 90 days horizon Aldel Financial is expected to generate 37.11 times less return on investment than Summit Materials. But when comparing it to its historical volatility, Aldel Financial II is 20.8 times less risky than Summit Materials. It trades about 0.12 of its potential returns per unit of risk. Summit Materials is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 4,563 in Summit Materials on August 28, 2024 and sell it today you would earn a total of 512.00 from holding Summit Materials or generate 11.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aldel Financial II vs. Summit Materials
Performance |
| Timeline |
| Aldel Financial II |
| Summit Materials |
Aldel Financial and Summit Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aldel Financial and Summit Materials
The main advantage of trading using opposite Aldel Financial and Summit Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aldel Financial 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.| Aldel Financial vs. Organic Sales and | Aldel Financial vs. Sealed Air | Aldel Financial vs. Inuvo Inc | Aldel Financial vs. Fluent Inc |
| 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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