Correlation Between Summit Materials and Critical Metals
Can any of the company-specific risk be diversified away by investing in both Summit Materials and Critical 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 Critical 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 Critical Metals Corp, you can compare the effects of market volatilities on Summit Materials and Critical 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 Critical Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Materials and Critical Metals.
Diversification Opportunities for Summit Materials and Critical Metals
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Summit and Critical is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials and Critical Metals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Critical Metals Corp 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 Critical Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Critical Metals Corp has no effect on the direction of Summit Materials i.e., Summit Materials and Critical Metals go up and down completely randomly.
Pair Corralation between Summit Materials and Critical Metals
Considering the 90-day investment horizon Summit Materials is expected to generate 3.88 times less return on investment than Critical Metals. But when comparing it to its historical volatility, Summit Materials is 3.71 times less risky than Critical Metals. It trades about 0.14 of its potential returns per unit of risk. Critical Metals Corp is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 647.00 in Critical Metals Corp on September 13, 2024 and sell it today you would earn a total of 92.00 from holding Critical Metals Corp or generate 14.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Summit Materials vs. Critical Metals Corp
Performance |
| Timeline |
| Summit Materials |
| Critical Metals Corp |
Summit Materials and Critical Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Materials and Critical Metals
The main advantage of trading using opposite Summit Materials and Critical Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Materials position performs unexpectedly, Critical 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 Critical Metals will offset losses from the drop in Critical 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 |
| Critical Metals vs. Summit Materials | Critical Metals vs. Summa Silver Corp | Critical Metals vs. Perseus Mining Limited | Critical Metals vs. Yuexiu Transport Infrastructure |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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