Correlation Between Summit Materials and Inflection Point
Can any of the company-specific risk be diversified away by investing in both Summit Materials and Inflection Point 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 Inflection Point into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Materials and Inflection Point Acquisition, you can compare the effects of market volatilities on Summit Materials and Inflection Point 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 Inflection Point. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Materials and Inflection Point.
Diversification Opportunities for Summit Materials and Inflection Point
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Summit and Inflection is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials and Inflection Point Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inflection Point Acq 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 Inflection Point. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inflection Point Acq has no effect on the direction of Summit Materials i.e., Summit Materials and Inflection Point go up and down completely randomly.
Pair Corralation between Summit Materials and Inflection Point
Considering the 90-day investment horizon Summit Materials is expected to generate 9.93 times more return on investment than Inflection Point. However, Summit Materials is 9.93 times more volatile than Inflection Point Acquisition. It trades about 0.09 of its potential returns per unit of risk. Inflection Point Acquisition is currently generating about 0.09 per unit of risk. If you would invest 3,445 in Summit Materials on August 24, 2024 and sell it today you would earn a total of 1,719 from holding Summit Materials or generate 49.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Summit Materials vs. Inflection Point Acquisition
Performance |
| Timeline |
| Summit Materials |
| Inflection Point Acq |
Summit Materials and Inflection Point Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Materials and Inflection Point
The main advantage of trading using opposite Summit Materials and Inflection Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Materials position performs unexpectedly, Inflection Point 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 Inflection Point will offset losses from the drop in Inflection Point'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 |
| Inflection Point vs. Aegon NV ADR | Inflection Point vs. NI Holdings | Inflection Point vs. Siriuspoint | Inflection Point vs. Marfrig Global Foods |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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