Correlation Between Summit Materials and Willamette Valley
Can any of the company-specific risk be diversified away by investing in both Summit Materials and Willamette Valley 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 Willamette Valley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Materials and Willamette Valley Vineyards, you can compare the effects of market volatilities on Summit Materials and Willamette Valley 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 Willamette Valley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Materials and Willamette Valley.
Diversification Opportunities for Summit Materials and Willamette Valley
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Summit and Willamette is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials and Willamette Valley Vineyards in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Willamette Valley 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 Willamette Valley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Willamette Valley has no effect on the direction of Summit Materials i.e., Summit Materials and Willamette Valley go up and down completely randomly.
Pair Corralation between Summit Materials and Willamette Valley
Considering the 90-day investment horizon Summit Materials is expected to generate 0.26 times more return on investment than Willamette Valley. However, Summit Materials is 3.88 times less risky than Willamette Valley. It trades about 0.27 of its potential returns per unit of risk. Willamette Valley Vineyards is currently generating about -0.07 per unit of risk. If you would invest 5,103 in Summit Materials on November 4, 2024 and sell it today you would earn a total of 128.00 from holding Summit Materials or generate 2.51% 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. Willamette Valley Vineyards
Performance |
| Timeline |
| Summit Materials |
| Willamette Valley |
Summit Materials and Willamette Valley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Materials and Willamette Valley
The main advantage of trading using opposite Summit Materials and Willamette Valley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Materials position performs unexpectedly, Willamette Valley 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 Willamette Valley will offset losses from the drop in Willamette Valley'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 |
| Willamette Valley vs. Naked Wines plc | Willamette Valley vs. Pernod Ricard SA | Willamette Valley vs. Brown Forman | Willamette Valley vs. Treasury Wine Estates |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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