Correlation Between Summit Materials and CVR Partners
Can any of the company-specific risk be diversified away by investing in both Summit Materials and CVR Partners 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 CVR Partners into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Materials and CVR Partners LP, you can compare the effects of market volatilities on Summit Materials and CVR Partners 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 CVR Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Materials and CVR Partners.
Diversification Opportunities for Summit Materials and CVR Partners
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Summit and CVR is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials and CVR Partners LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVR Partners LP 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 CVR Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVR Partners LP has no effect on the direction of Summit Materials i.e., Summit Materials and CVR Partners go up and down completely randomly.
Pair Corralation between Summit Materials and CVR Partners
Considering the 90-day investment horizon Summit Materials is expected to generate 1.0 times more return on investment than CVR Partners. However, Summit Materials is 1.0 times less risky than CVR Partners. It trades about 0.07 of its potential returns per unit of risk. CVR Partners LP is currently generating about 0.01 per unit of risk. If you would invest 3,048 in Summit Materials on August 30, 2024 and sell it today you would earn a total of 2,061 from holding Summit Materials or generate 67.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Summit Materials vs. CVR Partners LP
Performance |
| Timeline |
| Summit Materials |
| CVR Partners LP |
Summit Materials and CVR Partners Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Materials and CVR Partners
The main advantage of trading using opposite Summit Materials and CVR Partners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Materials position performs unexpectedly, CVR Partners 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 CVR Partners will offset losses from the drop in CVR Partners' 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 |
| CVR Partners vs. CF Industries Holdings | CVR Partners vs. The Mosaic | CVR Partners vs. American Vanguard | CVR Partners vs. ICL Israel Chemicals |
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 CEOs Directory module to screen CEOs from public companies around the world.
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