Correlation Between Summit Materials and CEMEX SAB
Can any of the company-specific risk be diversified away by investing in both Summit Materials and CEMEX SAB 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 CEMEX SAB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Materials and CEMEX SAB de, you can compare the effects of market volatilities on Summit Materials and CEMEX SAB 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 CEMEX SAB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Materials and CEMEX SAB.
Diversification Opportunities for Summit Materials and CEMEX SAB
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Summit and CEMEX is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials and CEMEX SAB de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CEMEX SAB de 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 CEMEX SAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CEMEX SAB de has no effect on the direction of Summit Materials i.e., Summit Materials and CEMEX SAB go up and down completely randomly.
Pair Corralation between Summit Materials and CEMEX SAB
Considering the 90-day investment horizon Summit Materials is expected to generate 1.04 times less return on investment than CEMEX SAB. But when comparing it to its historical volatility, Summit Materials is 2.1 times less risky than CEMEX SAB. It trades about 0.06 of its potential returns per unit of risk. CEMEX SAB de is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 44.00 in CEMEX SAB de on August 31, 2024 and sell it today you would earn a total of 8.00 from holding CEMEX SAB de or generate 18.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 91.31% |
| Values | Daily Returns |
Summit Materials vs. CEMEX SAB de
Performance |
| Timeline |
| Summit Materials |
| CEMEX SAB de |
Summit Materials and CEMEX SAB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Materials and CEMEX SAB
The main advantage of trading using opposite Summit Materials and CEMEX SAB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Materials position performs unexpectedly, CEMEX SAB 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 CEMEX SAB will offset losses from the drop in CEMEX SAB'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 |
| CEMEX SAB vs. Vulcan Materials | CEMEX SAB vs. Martin Marietta Materials | CEMEX SAB vs. Eagle Materials | CEMEX SAB vs. CRH PLC ADR |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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