Correlation Between Summit Materials and Franklin Street
Can any of the company-specific risk be diversified away by investing in both Summit Materials and Franklin Street 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 Franklin Street into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Materials and Franklin Street Properties, you can compare the effects of market volatilities on Summit Materials and Franklin Street 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 Franklin Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Materials and Franklin Street.
Diversification Opportunities for Summit Materials and Franklin Street
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Summit and Franklin is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials and Franklin Street Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Street Prop 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 Franklin Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Street Prop has no effect on the direction of Summit Materials i.e., Summit Materials and Franklin Street go up and down completely randomly.
Pair Corralation between Summit Materials and Franklin Street
Considering the 90-day investment horizon Summit Materials is expected to generate 0.72 times more return on investment than Franklin Street. However, Summit Materials is 1.39 times less risky than Franklin Street. It trades about 0.23 of its potential returns per unit of risk. Franklin Street Properties is currently generating about 0.06 per unit of risk. If you would invest 3,777 in Summit Materials on September 3, 2024 and sell it today you would earn a total of 1,317 from holding Summit Materials or generate 34.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Summit Materials vs. Franklin Street Properties
Performance |
| Timeline |
| Summit Materials |
| Franklin Street Prop |
Summit Materials and Franklin Street Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Materials and Franklin Street
The main advantage of trading using opposite Summit Materials and Franklin Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Materials position performs unexpectedly, Franklin Street 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 Franklin Street will offset losses from the drop in Franklin Street'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 |
| Franklin Street vs. Equity Commonwealth | Franklin Street vs. Cousins Properties Incorporated | Franklin Street vs. Creative Media Community | Franklin Street vs. Highwoods Properties |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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