Correlation Between SILICON LABORATOR and Summit Materials
Can any of the company-specific risk be diversified away by investing in both SILICON LABORATOR 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 SILICON LABORATOR and Summit Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SILICON LABORATOR and Summit Materials, you can compare the effects of market volatilities on SILICON LABORATOR 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 SILICON LABORATOR with a short position of Summit Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of SILICON LABORATOR and Summit Materials.
Diversification Opportunities for SILICON LABORATOR and Summit Materials
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between SILICON and Summit is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding SILICON LABORATOR and Summit Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Materials and SILICON LABORATOR 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 SILICON LABORATOR 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 SILICON LABORATOR i.e., SILICON LABORATOR and Summit Materials go up and down completely randomly.
Pair Corralation between SILICON LABORATOR and Summit Materials
Assuming the 90 days trading horizon SILICON LABORATOR is expected to generate 2.79 times more return on investment than Summit Materials. However, SILICON LABORATOR is 2.79 times more volatile than Summit Materials. It trades about 0.34 of its potential returns per unit of risk. Summit Materials is currently generating about 0.19 per unit of risk. If you would invest 10,900 in SILICON LABORATOR on October 10, 2024 and sell it today you would earn a total of 1,600 from holding SILICON LABORATOR or generate 14.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SILICON LABORATOR vs. Summit Materials
Performance |
| Timeline |
| SILICON LABORATOR |
| Summit Materials |
SILICON LABORATOR and Summit Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SILICON LABORATOR and Summit Materials
The main advantage of trading using opposite SILICON LABORATOR and Summit Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SILICON LABORATOR 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.| SILICON LABORATOR vs. PLAYMATES TOYS | SILICON LABORATOR vs. Media and Games | SILICON LABORATOR vs. Universal Insurance Holdings | SILICON LABORATOR vs. GAMESTOP |
| Summit Materials vs. Tianjin Capital Environmental | Summit Materials vs. Jacquet Metal Service | Summit Materials vs. ANGANG STEEL H | Summit Materials vs. De Grey Mining |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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