Correlation Between GrafTech International and Summit Materials
Can any of the company-specific risk be diversified away by investing in both GrafTech International 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 GrafTech International and Summit Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GrafTech International and Summit Materials, you can compare the effects of market volatilities on GrafTech International 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 GrafTech International with a short position of Summit Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of GrafTech International and Summit Materials.
Diversification Opportunities for GrafTech International and Summit Materials
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between GrafTech and Summit is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding GrafTech International and Summit Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Materials and GrafTech International 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 GrafTech International 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 GrafTech International i.e., GrafTech International and Summit Materials go up and down completely randomly.
Pair Corralation between GrafTech International and Summit Materials
Assuming the 90 days horizon GrafTech International is expected to generate 5.1 times less return on investment than Summit Materials. In addition to that, GrafTech International is 2.91 times more volatile than Summit Materials. It trades about 0.01 of its total potential returns per unit of risk. Summit Materials is currently generating about 0.08 per unit of volatility. If you would invest 3,220 in Summit Materials on October 27, 2024 and sell it today you would earn a total of 1,740 from holding Summit Materials or generate 54.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.66% |
| Values | Daily Returns |
GrafTech International vs. Summit Materials
Performance |
| Timeline |
| GrafTech International |
| Summit Materials |
GrafTech International and Summit Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GrafTech International and Summit Materials
The main advantage of trading using opposite GrafTech International and Summit Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GrafTech International 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.| GrafTech International vs. Spirent Communications plc | GrafTech International vs. Magic Software Enterprises | GrafTech International vs. Micron Technology | GrafTech International vs. Guidewire Software |
| Summit Materials vs. Hitachi Construction Machinery | Summit Materials vs. Australian Agricultural | Summit Materials vs. Titan Machinery | Summit Materials vs. FARM 51 GROUP |
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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