Correlation Between NTG Nordic and Summit Materials
Can any of the company-specific risk be diversified away by investing in both NTG Nordic 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 NTG Nordic and Summit Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NTG Nordic Transport and Summit Materials, you can compare the effects of market volatilities on NTG Nordic 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 NTG Nordic with a short position of Summit Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of NTG Nordic and Summit Materials.
Diversification Opportunities for NTG Nordic and Summit Materials
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NTG and Summit is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding NTG Nordic Transport and Summit Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Materials and NTG Nordic 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 NTG Nordic Transport 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 NTG Nordic i.e., NTG Nordic and Summit Materials go up and down completely randomly.
Pair Corralation between NTG Nordic and Summit Materials
Assuming the 90 days trading horizon NTG Nordic Transport is expected to under-perform the Summit Materials. In addition to that, NTG Nordic is 1.15 times more volatile than Summit Materials. It trades about -0.31 of its total potential returns per unit of risk. Summit Materials is currently generating about 0.25 per unit of volatility. If you would invest 4,820 in Summit Materials on October 17, 2024 and sell it today you would earn a total of 230.00 from holding Summit Materials or generate 4.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 94.44% |
| Values | Daily Returns |
NTG Nordic Transport vs. Summit Materials
Performance |
| Timeline |
| NTG Nordic Transport |
| Summit Materials |
NTG Nordic and Summit Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NTG Nordic and Summit Materials
The main advantage of trading using opposite NTG Nordic and Summit Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NTG Nordic 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.| NTG Nordic vs. Choice Hotels International | NTG Nordic vs. DALATA HOTEL | NTG Nordic vs. CITY OFFICE REIT | NTG Nordic vs. Hyatt Hotels |
| Summit Materials vs. Fukuyama Transporting Co | Summit Materials vs. SPORTING | Summit Materials vs. NTG Nordic Transport | Summit Materials vs. Sekisui Chemical Co |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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