Correlation Between Summit Materials and Beyond Meat
Can any of the company-specific risk be diversified away by investing in both Summit Materials and Beyond Meat 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 Beyond Meat into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Materials and Beyond Meat, you can compare the effects of market volatilities on Summit Materials and Beyond Meat 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 Beyond Meat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Materials and Beyond Meat.
Diversification Opportunities for Summit Materials and Beyond Meat
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Summit and Beyond is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials and Beyond Meat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beyond Meat 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 Beyond Meat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beyond Meat has no effect on the direction of Summit Materials i.e., Summit Materials and Beyond Meat go up and down completely randomly.
Pair Corralation between Summit Materials and Beyond Meat
Considering the 90-day investment horizon Summit Materials is expected to generate 0.54 times more return on investment than Beyond Meat. However, Summit Materials is 1.84 times less risky than Beyond Meat. It trades about 0.2 of its potential returns per unit of risk. Beyond Meat is currently generating about -0.19 per unit of risk. If you would invest 4,642 in Summit Materials on August 31, 2024 and sell it today you would earn a total of 467.00 from holding Summit Materials or generate 10.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Summit Materials vs. Beyond Meat
Performance |
| Timeline |
| Summit Materials |
| Beyond Meat |
Summit Materials and Beyond Meat Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Materials and Beyond Meat
The main advantage of trading using opposite Summit Materials and Beyond Meat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Materials position performs unexpectedly, Beyond Meat 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 Beyond Meat will offset losses from the drop in Beyond Meat'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 |
| Beyond Meat vs. Better Choice | Beyond Meat vs. Sharing Services Global | Beyond Meat vs. Bit Origin | Beyond Meat vs. Planet Green 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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