Correlation Between BRC and Summit Materials
Can any of the company-specific risk be diversified away by investing in both BRC 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 BRC and Summit Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BRC Inc and Summit Materials, you can compare the effects of market volatilities on BRC 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 BRC with a short position of Summit Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of BRC and Summit Materials.
Diversification Opportunities for BRC and Summit Materials
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BRC and Summit is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding BRC Inc and Summit Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Materials and BRC 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 BRC Inc 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 BRC i.e., BRC and Summit Materials go up and down completely randomly.
Pair Corralation between BRC and Summit Materials
Given the investment horizon of 90 days BRC Inc is expected to under-perform the Summit Materials. In addition to that, BRC is 5.27 times more volatile than Summit Materials. It trades about -0.33 of its total potential returns per unit of risk. Summit Materials is currently generating about 0.28 per unit of volatility. If you would invest 5,095 in Summit Materials on November 3, 2024 and sell it today you would earn a total of 136.00 from holding Summit Materials or generate 2.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BRC Inc vs. Summit Materials
Performance |
| Timeline |
| BRC Inc |
| Summit Materials |
BRC and Summit Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BRC and Summit Materials
The main advantage of trading using opposite BRC and Summit Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BRC 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.The idea behind BRC Inc and Summit Materials pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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