Correlation Between Summit Materials and CVW CleanTech
Can any of the company-specific risk be diversified away by investing in both Summit Materials and CVW CleanTech 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 CVW CleanTech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Materials and CVW CleanTech, you can compare the effects of market volatilities on Summit Materials and CVW CleanTech 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 CVW CleanTech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Materials and CVW CleanTech.
Diversification Opportunities for Summit Materials and CVW CleanTech
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Summit and CVW is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials and CVW CleanTech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVW CleanTech 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 CVW CleanTech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVW CleanTech has no effect on the direction of Summit Materials i.e., Summit Materials and CVW CleanTech go up and down completely randomly.
Pair Corralation between Summit Materials and CVW CleanTech
Considering the 90-day investment horizon Summit Materials is expected to generate 2.55 times less return on investment than CVW CleanTech. But when comparing it to its historical volatility, Summit Materials is 4.35 times less risky than CVW CleanTech. It trades about 0.06 of its potential returns per unit of risk. CVW CleanTech is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 75.00 in CVW CleanTech on August 27, 2024 and sell it today you would lose (13.00) from holding CVW CleanTech or give up 17.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Summit Materials vs. CVW CleanTech
Performance |
| Timeline |
| Summit Materials |
| CVW CleanTech |
Summit Materials and CVW CleanTech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Materials and CVW CleanTech
The main advantage of trading using opposite Summit Materials and CVW CleanTech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Materials position performs unexpectedly, CVW CleanTech 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 CVW CleanTech will offset losses from the drop in CVW CleanTech'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 |
| CVW CleanTech vs. Legacy Education | CVW CleanTech vs. NVIDIA | CVW CleanTech vs. Apple Inc | CVW CleanTech vs. Microsoft |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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