Correlation Between Summit Materials and Emerson Radio
Can any of the company-specific risk be diversified away by investing in both Summit Materials and Emerson Radio 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 Emerson Radio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Materials and Emerson Radio, you can compare the effects of market volatilities on Summit Materials and Emerson Radio 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 Emerson Radio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Materials and Emerson Radio.
Diversification Opportunities for Summit Materials and Emerson Radio
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Summit and Emerson is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials and Emerson Radio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerson Radio 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 Emerson Radio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerson Radio has no effect on the direction of Summit Materials i.e., Summit Materials and Emerson Radio go up and down completely randomly.
Pair Corralation between Summit Materials and Emerson Radio
Considering the 90-day investment horizon Summit Materials is expected to generate 0.69 times more return on investment than Emerson Radio. However, Summit Materials is 1.45 times less risky than Emerson Radio. It trades about 0.07 of its potential returns per unit of risk. Emerson Radio is currently generating about 0.0 per unit of risk. If you would invest 2,875 in Summit Materials on August 26, 2024 and sell it today you would earn a total of 2,291 from holding Summit Materials or generate 79.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Summit Materials vs. Emerson Radio
Performance |
| Timeline |
| Summit Materials |
| Emerson Radio |
Summit Materials and Emerson Radio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Materials and Emerson Radio
The main advantage of trading using opposite Summit Materials and Emerson Radio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Materials position performs unexpectedly, Emerson Radio 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 Emerson Radio will offset losses from the drop in Emerson Radio's long position.| Summit Materials vs. Holcim | Summit Materials vs. Lafargeholcim Ltd ADR | Summit Materials vs. Eagle Materials | Summit Materials vs. James Hardie Industries |
| Emerson Radio vs. VOXX International | Emerson Radio vs. LG Display Co | Emerson Radio vs. Vizio Holding Corp | Emerson Radio vs. Koss Corporation |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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