Correlation Between Summit Materials and Dream Finders
Can any of the company-specific risk be diversified away by investing in both Summit Materials and Dream Finders 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 Dream Finders into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Materials and Dream Finders Homes, you can compare the effects of market volatilities on Summit Materials and Dream Finders 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 Dream Finders. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Materials and Dream Finders.
Diversification Opportunities for Summit Materials and Dream Finders
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Summit and Dream is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials and Dream Finders Homes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dream Finders Homes 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 Dream Finders. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dream Finders Homes has no effect on the direction of Summit Materials i.e., Summit Materials and Dream Finders go up and down completely randomly.
Pair Corralation between Summit Materials and Dream Finders
Considering the 90-day investment horizon Summit Materials is expected to generate 0.57 times more return on investment than Dream Finders. However, Summit Materials is 1.77 times less risky than Dream Finders. It trades about 0.08 of its potential returns per unit of risk. Dream Finders Homes is currently generating about 0.04 per unit of risk. If you would invest 3,594 in Summit Materials on September 2, 2024 and sell it today you would earn a total of 1,500 from holding Summit Materials or generate 41.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Summit Materials vs. Dream Finders Homes
Performance |
| Timeline |
| Summit Materials |
| Dream Finders Homes |
Summit Materials and Dream Finders Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Materials and Dream Finders
The main advantage of trading using opposite Summit Materials and Dream Finders positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Materials position performs unexpectedly, Dream Finders 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 Dream Finders will offset losses from the drop in Dream Finders' long position.| Summit Materials vs. Martin Marietta Materials | Summit Materials vs. Vulcan Materials | Summit Materials vs. James Hardie Industries | Summit Materials vs. Eagle Materials |
| Dream Finders vs. Hovnanian Enterprises | Dream Finders vs. Taylor Morn Home | Dream Finders vs. KB Home | Dream Finders vs. MI Homes |
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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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