Correlation Between Summit Materials and AKITA Drilling
Can any of the company-specific risk be diversified away by investing in both Summit Materials and AKITA Drilling 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 AKITA Drilling into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Materials and AKITA Drilling, you can compare the effects of market volatilities on Summit Materials and AKITA Drilling 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 AKITA Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Materials and AKITA Drilling.
Diversification Opportunities for Summit Materials and AKITA Drilling
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Summit and AKITA is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials and AKITA Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AKITA Drilling 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 AKITA Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AKITA Drilling has no effect on the direction of Summit Materials i.e., Summit Materials and AKITA Drilling go up and down completely randomly.
Pair Corralation between Summit Materials and AKITA Drilling
Considering the 90-day investment horizon Summit Materials is expected to generate 0.98 times more return on investment than AKITA Drilling. However, Summit Materials is 1.03 times less risky than AKITA Drilling. It trades about 0.14 of its potential returns per unit of risk. AKITA Drilling is currently generating about 0.01 per unit of risk. If you would invest 4,899 in Summit Materials on September 13, 2024 and sell it today you would earn a total of 192.00 from holding Summit Materials or generate 3.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Summit Materials vs. AKITA Drilling
Performance |
| Timeline |
| Summit Materials |
| AKITA Drilling |
Summit Materials and AKITA Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Materials and AKITA Drilling
The main advantage of trading using opposite Summit Materials and AKITA Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Materials position performs unexpectedly, AKITA Drilling 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 AKITA Drilling will offset losses from the drop in AKITA Drilling's 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 |
| AKITA Drilling vs. Cathedral Energy Services | AKITA Drilling vs. Vantage Drilling International | AKITA Drilling vs. Seadrill Limited | AKITA Drilling vs. Noble plc |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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