Correlation Between ChampionX and Summit Materials
Can any of the company-specific risk be diversified away by investing in both ChampionX 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 ChampionX and Summit Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ChampionX and Summit Materials, you can compare the effects of market volatilities on ChampionX 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 ChampionX with a short position of Summit Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of ChampionX and Summit Materials.
Diversification Opportunities for ChampionX and Summit Materials
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between ChampionX and Summit is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding ChampionX and Summit Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Materials and ChampionX 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 ChampionX 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 ChampionX i.e., ChampionX and Summit Materials go up and down completely randomly.
Pair Corralation between ChampionX and Summit Materials
Considering the 90-day investment horizon ChampionX is expected to generate 21.65 times less return on investment than Summit Materials. But when comparing it to its historical volatility, ChampionX is 1.03 times less risky than Summit Materials. It trades about 0.0 of its potential returns per unit of risk. Summit Materials is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 3,381 in Summit Materials on September 14, 2024 and sell it today you would earn a total of 1,697 from holding Summit Materials or generate 50.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ChampionX vs. Summit Materials
Performance |
| Timeline |
| ChampionX |
| Summit Materials |
ChampionX and Summit Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ChampionX and Summit Materials
The main advantage of trading using opposite ChampionX and Summit Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ChampionX 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.| ChampionX vs. Expro Group Holdings | ChampionX vs. Ranger Energy Services | ChampionX vs. Cactus Inc | ChampionX vs. MRC Global |
| 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 Stocks Directory module to find actively traded stocks across global markets.
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