Correlation Between Summit Materials and Genuine Parts
Can any of the company-specific risk be diversified away by investing in both Summit Materials and Genuine Parts 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 Genuine Parts into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Materials and Genuine Parts Co, you can compare the effects of market volatilities on Summit Materials and Genuine Parts 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 Genuine Parts. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Materials and Genuine Parts.
Diversification Opportunities for Summit Materials and Genuine Parts
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Summit and Genuine is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials and Genuine Parts Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genuine Parts 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 Genuine Parts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genuine Parts has no effect on the direction of Summit Materials i.e., Summit Materials and Genuine Parts go up and down completely randomly.
Pair Corralation between Summit Materials and Genuine Parts
Considering the 90-day investment horizon Summit Materials is expected to generate 1.31 times more return on investment than Genuine Parts. However, Summit Materials is 1.31 times more volatile than Genuine Parts Co. It trades about 0.22 of its potential returns per unit of risk. Genuine Parts Co is currently generating about 0.24 per unit of risk. If you would invest 4,563 in Summit Materials on August 28, 2024 and sell it today you would earn a total of 512.00 from holding Summit Materials or generate 11.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Summit Materials vs. Genuine Parts Co
Performance |
| Timeline |
| Summit Materials |
| Genuine Parts |
Summit Materials and Genuine Parts Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Materials and Genuine Parts
The main advantage of trading using opposite Summit Materials and Genuine Parts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Materials position performs unexpectedly, Genuine Parts 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 Genuine Parts will offset losses from the drop in Genuine Parts' 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 |
| Genuine Parts vs. Steven Madden | Genuine Parts vs. Vera Bradley | Genuine Parts vs. Caleres | Genuine Parts vs. Rocky Brands |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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