Correlation Between Summa Silver and Summit Materials

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Can any of the company-specific risk be diversified away by investing in both Summa Silver 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 Summa Silver and Summit Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summa Silver Corp and Summit Materials, you can compare the effects of market volatilities on Summa Silver 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 Summa Silver with a short position of Summit Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summa Silver and Summit Materials.

Diversification Opportunities for Summa Silver and Summit Materials

SummaSummitDiversified AwaySummaSummitDiversified Away100%
0.67
  Correlation Coefficient

Poor diversification

The 3 months correlation between Summa and Summit is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Summa Silver Corp and Summit Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Materials and Summa Silver 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 Summa Silver 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 Summa Silver i.e., Summa Silver and Summit Materials go up and down completely randomly.

Pair Corralation between Summa Silver and Summit Materials

Assuming the 90 days horizon Summa Silver Corp is expected to under-perform the Summit Materials. In addition to that, Summa Silver is 2.53 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 0.09 per unit of volatility. If you would invest  2,634  in Summit Materials on November 27, 2024 and sell it today you would earn a total of  2,615  from holding Summit Materials or generate 99.28% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy98.3%
ValuesDaily Returns

Summa Silver Corp  vs.  Summit Materials

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -100102030
JavaScript chart by amCharts 3.21.15SSVRF SUM
       Timeline  
Summa Silver Corp 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Summa Silver Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Summa Silver reported solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb0.180.20.220.240.260.28
Summit Materials 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Over the last 90 days Summit Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Summit Materials is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Summa Silver and Summit Materials Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-15.49-11.6-7.71-3.820.06483.968.0612.1616.2520.35 0.050.100.150.20
JavaScript chart by amCharts 3.21.15SSVRF SUM
       Returns  

Pair Trading with Summa Silver and Summit Materials

The main advantage of trading using opposite Summa Silver and Summit Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summa Silver 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.
The idea behind Summa Silver Corp and Summit Materials pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.

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