Correlation Between Summit Materials and Fossil
Can any of the company-specific risk be diversified away by investing in both Summit Materials and Fossil 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 Fossil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Materials and Fossil Group, you can compare the effects of market volatilities on Summit Materials and Fossil 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 Fossil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Materials and Fossil.
Diversification Opportunities for Summit Materials and Fossil
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Summit and Fossil is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials and Fossil Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fossil Group 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 Fossil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fossil Group has no effect on the direction of Summit Materials i.e., Summit Materials and Fossil go up and down completely randomly.
Pair Corralation between Summit Materials and Fossil
Considering the 90-day investment horizon Summit Materials is expected to generate 0.41 times more return on investment than Fossil. However, Summit Materials is 2.41 times less risky than Fossil. It trades about 0.06 of its potential returns per unit of risk. Fossil Group is currently generating about -0.02 per unit of risk. If you would invest 2,975 in Summit Materials on August 29, 2024 and sell it today you would earn a total of 2,110 from holding Summit Materials or generate 70.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Summit Materials vs. Fossil Group
Performance |
| Timeline |
| Summit Materials |
| Fossil Group |
Summit Materials and Fossil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Materials and Fossil
The main advantage of trading using opposite Summit Materials and Fossil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Materials position performs unexpectedly, Fossil 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 Fossil will offset losses from the drop in Fossil's long position.| Summit Materials vs. Holcim | Summit Materials vs. Lafargeholcim Ltd ADR | Summit Materials vs. The Monarch Cement |
| Fossil vs. Lanvin Group Holdings | Fossil vs. Signet Jewelers | Fossil vs. Tapestry | Fossil vs. Capri 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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