Correlation Between Critical Metals and Summit Materials
Can any of the company-specific risk be diversified away by investing in both Critical Metals 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 Critical Metals and Summit Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Critical Metals Corp and Summit Materials, you can compare the effects of market volatilities on Critical Metals 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 Critical Metals with a short position of Summit Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Critical Metals and Summit Materials.
Diversification Opportunities for Critical Metals and Summit Materials
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Critical and Summit is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Critical Metals Corp and Summit Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Materials and Critical Metals 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 Critical Metals 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 Critical Metals i.e., Critical Metals and Summit Materials go up and down completely randomly.
Pair Corralation between Critical Metals and Summit Materials
Given the investment horizon of 90 days Critical Metals Corp is expected to generate 3.87 times more return on investment than Summit Materials. However, Critical Metals is 3.87 times more volatile than Summit Materials. It trades about 0.11 of its potential returns per unit of risk. Summit Materials is currently generating about 0.16 per unit of risk. If you would invest 627.00 in Critical Metals Corp on September 14, 2024 and sell it today you would earn a total of 64.00 from holding Critical Metals Corp or generate 10.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Critical Metals Corp vs. Summit Materials
Performance |
| Timeline |
| Critical Metals Corp |
| Summit Materials |
Critical Metals and Summit Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Critical Metals and Summit Materials
The main advantage of trading using opposite Critical Metals and Summit Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Critical Metals 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.| Critical Metals vs. Encore Capital Group | Critical Metals vs. Delek Logistics Partners | Critical Metals vs. Sun Country Airlines | Critical Metals vs. Freedom Bank of |
| 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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