Correlation Between CDW Corp and Summit Materials
Can any of the company-specific risk be diversified away by investing in both CDW Corp 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 CDW Corp and Summit Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CDW Corp and Summit Materials, you can compare the effects of market volatilities on CDW Corp 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 CDW Corp with a short position of Summit Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of CDW Corp and Summit Materials.
Diversification Opportunities for CDW Corp and Summit Materials
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between CDW and Summit is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding CDW Corp and Summit Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Materials and CDW Corp 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 CDW Corp 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 CDW Corp i.e., CDW Corp and Summit Materials go up and down completely randomly.
Pair Corralation between CDW Corp and Summit Materials
Considering the 90-day investment horizon CDW Corp is expected to under-perform the Summit Materials. In addition to that, CDW Corp is 1.31 times more volatile than Summit Materials. It trades about -0.25 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 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 | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CDW Corp vs. Summit Materials
Performance |
| Timeline |
| CDW Corp |
| Summit Materials |
CDW Corp and Summit Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CDW Corp and Summit Materials
The main advantage of trading using opposite CDW Corp and Summit Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CDW Corp 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.| CDW Corp vs. CACI International | CDW Corp vs. Jack Henry Associates | CDW Corp vs. Broadridge Financial Solutions | CDW Corp vs. ExlService Holdings |
| Summit Materials vs. Holcim | Summit Materials vs. Lafargeholcim Ltd ADR | Summit Materials vs. The Monarch Cement |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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