Correlation Between Summit Materials and Grupo Simec
Can any of the company-specific risk be diversified away by investing in both Summit Materials and Grupo Simec 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 Grupo Simec into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Materials and Grupo Simec SAB, you can compare the effects of market volatilities on Summit Materials and Grupo Simec 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 Grupo Simec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Materials and Grupo Simec.
Diversification Opportunities for Summit Materials and Grupo Simec
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Summit and Grupo is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials and Grupo Simec SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Simec SAB 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 Grupo Simec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Simec SAB has no effect on the direction of Summit Materials i.e., Summit Materials and Grupo Simec go up and down completely randomly.
Pair Corralation between Summit Materials and Grupo Simec
Considering the 90-day investment horizon Summit Materials is expected to generate 0.83 times more return on investment than Grupo Simec. However, Summit Materials is 1.21 times less risky than Grupo Simec. It trades about 0.09 of its potential returns per unit of risk. Grupo Simec SAB is currently generating about -0.03 per unit of risk. If you would invest 3,618 in Summit Materials on August 28, 2024 and sell it today you would earn a total of 1,457 from holding Summit Materials or generate 40.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 77.51% |
| Values | Daily Returns |
Summit Materials vs. Grupo Simec SAB
Performance |
| Timeline |
| Summit Materials |
| Grupo Simec SAB |
Summit Materials and Grupo Simec Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Materials and Grupo Simec
The main advantage of trading using opposite Summit Materials and Grupo Simec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Materials position performs unexpectedly, Grupo Simec 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 Grupo Simec will offset losses from the drop in Grupo Simec's long position.| Summit Materials vs. Holcim | Summit Materials vs. Lafargeholcim Ltd ADR | Summit Materials vs. The Monarch Cement |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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