Correlation Between Summit Materials and Sweetgreen
Can any of the company-specific risk be diversified away by investing in both Summit Materials and Sweetgreen 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 Sweetgreen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Materials and Sweetgreen, you can compare the effects of market volatilities on Summit Materials and Sweetgreen 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 Sweetgreen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Materials and Sweetgreen.
Diversification Opportunities for Summit Materials and Sweetgreen
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Summit and Sweetgreen is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials and Sweetgreen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sweetgreen 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 Sweetgreen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sweetgreen has no effect on the direction of Summit Materials i.e., Summit Materials and Sweetgreen go up and down completely randomly.
Pair Corralation between Summit Materials and Sweetgreen
Considering the 90-day investment horizon Summit Materials is expected to generate 1.03 times less return on investment than Sweetgreen. But when comparing it to its historical volatility, Summit Materials is 2.04 times less risky than Sweetgreen. It trades about 0.26 of its potential returns per unit of risk. Sweetgreen is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 3,883 in Sweetgreen on August 27, 2024 and sell it today you would earn a total of 457.00 from holding Sweetgreen or generate 11.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Summit Materials vs. Sweetgreen
Performance |
| Timeline |
| Summit Materials |
| Sweetgreen |
Summit Materials and Sweetgreen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Materials and Sweetgreen
The main advantage of trading using opposite Summit Materials and Sweetgreen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Materials position performs unexpectedly, Sweetgreen 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 Sweetgreen will offset losses from the drop in Sweetgreen'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 |
| Sweetgreen vs. Cannae Holdings | Sweetgreen vs. Brinker International | Sweetgreen vs. Jack In The | Sweetgreen vs. Biglari 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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