Correlation Between Brunswick and Summit Materials
Can any of the company-specific risk be diversified away by investing in both Brunswick 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 Brunswick and Summit Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brunswick and Summit Materials, you can compare the effects of market volatilities on Brunswick 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 Brunswick with a short position of Summit Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brunswick and Summit Materials.
Diversification Opportunities for Brunswick and Summit Materials
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Brunswick and Summit is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Brunswick and Summit Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Materials and Brunswick 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 Brunswick 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 Brunswick i.e., Brunswick and Summit Materials go up and down completely randomly.
Pair Corralation between Brunswick and Summit Materials
Allowing for the 90-day total investment horizon Brunswick is expected to under-perform the Summit Materials. In addition to that, Brunswick is 1.07 times more volatile than Summit Materials. It trades about -0.01 of its total potential returns per unit of risk. Summit Materials is currently generating about 0.22 per unit of volatility. If you would invest 4,563 in Summit Materials on August 29, 2024 and sell it today you would earn a total of 522.00 from holding Summit Materials or generate 11.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brunswick vs. Summit Materials
Performance |
| Timeline |
| Brunswick |
| Summit Materials |
Brunswick and Summit Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brunswick and Summit Materials
The main advantage of trading using opposite Brunswick and Summit Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brunswick 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.| Brunswick vs. MCBC Holdings | Brunswick vs. Marine Products | Brunswick vs. Winnebago Industries | Brunswick vs. LCI Industries |
| 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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