Correlation Between Media and Summit Materials
Can any of the company-specific risk be diversified away by investing in both Media 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 Media and Summit Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Media and Games and Summit Materials, you can compare the effects of market volatilities on Media 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 Media with a short position of Summit Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Media and Summit Materials.
Diversification Opportunities for Media and Summit Materials
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Media and Summit is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Media and Games and Summit Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Materials and Media 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 Media and Games 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 Media i.e., Media and Summit Materials go up and down completely randomly.
Pair Corralation between Media and Summit Materials
Assuming the 90 days trading horizon Media and Games is expected to generate 1.8 times more return on investment than Summit Materials. However, Media is 1.8 times more volatile than Summit Materials. It trades about 0.05 of its potential returns per unit of risk. Summit Materials is currently generating about 0.06 per unit of risk. If you would invest 165.00 in Media and Games on October 11, 2024 and sell it today you would earn a total of 142.00 from holding Media and Games or generate 86.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Media and Games vs. Summit Materials
Performance |
| Timeline |
| Media and Games |
| Summit Materials |
Media and Summit Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Media and Summit Materials
The main advantage of trading using opposite Media and Summit Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Media 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.| Media vs. BURLINGTON STORES | Media vs. Cogent Communications Holdings | Media vs. T MOBILE INCDL 00001 | Media vs. Iridium Communications |
| Summit Materials vs. UNIDOC HEALTH P | Summit Materials vs. Media and Games | Summit Materials vs. NIGHTINGALE HEALTH EO | Summit Materials vs. RCI Hospitality Holdings |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
Other Complementary Tools
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Transaction History View history of all your transactions and understand their impact on performance |