Correlation Between Capital Clean and Summit Materials
Can any of the company-specific risk be diversified away by investing in both Capital Clean 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 Capital Clean and Summit Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capital Clean Energy and Summit Materials, you can compare the effects of market volatilities on Capital Clean 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 Capital Clean with a short position of Summit Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital Clean and Summit Materials.
Diversification Opportunities for Capital Clean and Summit Materials
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Capital and Summit is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Capital Clean Energy and Summit Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Materials and Capital Clean 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 Capital Clean Energy 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 Capital Clean i.e., Capital Clean and Summit Materials go up and down completely randomly.
Pair Corralation between Capital Clean and Summit Materials
Given the investment horizon of 90 days Capital Clean is expected to generate 2.1 times less return on investment than Summit Materials. In addition to that, Capital Clean is 2.89 times more volatile than Summit Materials. It trades about 0.06 of its total potential returns per unit of risk. Summit Materials is currently generating about 0.36 per unit of volatility. If you would invest 5,050 in Summit Materials on October 21, 2024 and sell it today you would earn a total of 169.00 from holding Summit Materials or generate 3.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capital Clean Energy vs. Summit Materials
Performance |
| Timeline |
| Capital Clean Energy |
| Summit Materials |
Capital Clean and Summit Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital Clean and Summit Materials
The main advantage of trading using opposite Capital Clean and Summit Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital Clean 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.| Capital Clean vs. Fidus Investment Corp | Capital Clean vs. BRC Inc | Capital Clean vs. Gladstone Investment | Capital Clean vs. National Waste Management |
| 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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