Correlation Between Summit Materials and SUNation Energy
Can any of the company-specific risk be diversified away by investing in both Summit Materials and SUNation Energy 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 SUNation Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Materials and SUNation Energy, you can compare the effects of market volatilities on Summit Materials and SUNation Energy 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 SUNation Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Materials and SUNation Energy.
Diversification Opportunities for Summit Materials and SUNation Energy
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Summit and SUNation is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials and SUNation Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SUNation Energy 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 SUNation Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SUNation Energy has no effect on the direction of Summit Materials i.e., Summit Materials and SUNation Energy go up and down completely randomly.
Pair Corralation between Summit Materials and SUNation Energy
Considering the 90-day investment horizon Summit Materials is expected to generate 0.17 times more return on investment than SUNation Energy. However, Summit Materials is 5.77 times less risky than SUNation Energy. It trades about 0.06 of its potential returns per unit of risk. SUNation Energy is currently generating about -0.06 per unit of risk. If you would invest 3,322 in Summit Materials on October 25, 2024 and sell it today you would earn a total of 1,897 from holding Summit Materials or generate 57.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Summit Materials vs. SUNation Energy
Performance |
| Timeline |
| Summit Materials |
| SUNation Energy |
Summit Materials and SUNation Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Materials and SUNation Energy
The main advantage of trading using opposite Summit Materials and SUNation Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Materials position performs unexpectedly, SUNation Energy 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 SUNation Energy will offset losses from the drop in SUNation Energy'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 |
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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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