Correlation Between Summit Materials and Aerofoam Metals
Can any of the company-specific risk be diversified away by investing in both Summit Materials and Aerofoam Metals 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 Summit Materials and Aerofoam Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Materials and Aerofoam Metals, you can compare the effects of market volatilities on Summit Materials and Aerofoam Metals 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 Summit Materials with a short position of Aerofoam Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Materials and Aerofoam Metals.
Diversification Opportunities for Summit Materials and Aerofoam Metals
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Summit and Aerofoam is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials and Aerofoam Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aerofoam Metals and Summit Materials 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 Summit Materials are associated (or correlated) with Aerofoam Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aerofoam Metals has no effect on the direction of Summit Materials i.e., Summit Materials and Aerofoam Metals go up and down completely randomly.
Pair Corralation between Summit Materials and Aerofoam Metals
Considering the 90-day investment horizon Summit Materials is expected to generate 25.99 times less return on investment than Aerofoam Metals. But when comparing it to its historical volatility, Summit Materials is 27.73 times less risky than Aerofoam Metals. It trades about 0.06 of its potential returns per unit of risk. Aerofoam Metals is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 0.00 in Aerofoam Metals on August 28, 2024 and sell it today you would earn a total of 0.01 from holding Aerofoam Metals or generate 9.223372036854776E16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Summit Materials vs. Aerofoam Metals
Performance |
| Timeline |
| Summit Materials |
| Aerofoam Metals |
Summit Materials and Aerofoam Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Materials and Aerofoam Metals
The main advantage of trading using opposite Summit Materials and Aerofoam Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Materials position performs unexpectedly, Aerofoam Metals 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 Aerofoam Metals will offset losses from the drop in Aerofoam Metals' long position.| Summit Materials vs. Martin Marietta Materials | Summit Materials vs. Vulcan Materials | Summit Materials vs. United States Lime | Summit Materials vs. James Hardie Industries |
| Aerofoam Metals vs. FitLife Brands, Common | Aerofoam Metals vs. HUMANA INC | Aerofoam Metals vs. SCOR PK | Aerofoam Metals vs. Aquagold International |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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