Correlation Between Uber Technologies and Summit Materials
Can any of the company-specific risk be diversified away by investing in both Uber Technologies and Summit Materials 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 Uber Technologies and Summit Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Uber Technologies and Summit Materials, you can compare the effects of market volatilities on Uber Technologies and Summit Materials 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 Uber Technologies with a short position of Summit Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Uber Technologies and Summit Materials.
Diversification Opportunities for Uber Technologies and Summit Materials
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Uber and Summit is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Uber Technologies and Summit Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Materials and Uber Technologies 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 Uber Technologies are associated (or correlated) with Summit Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Materials has no effect on the direction of Uber Technologies i.e., Uber Technologies and Summit Materials go up and down completely randomly.
Pair Corralation between Uber Technologies and Summit Materials
Given the investment horizon of 90 days Uber Technologies is expected to generate 1.12 times more return on investment than Summit Materials. However, Uber Technologies is 1.12 times more volatile than Summit Materials. It trades about 0.07 of its potential returns per unit of risk. Summit Materials is currently generating about 0.06 per unit of risk. If you would invest 4,174 in Uber Technologies on September 2, 2024 and sell it today you would earn a total of 3,022 from holding Uber Technologies or generate 72.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Uber Technologies vs. Summit Materials
Performance |
| Timeline |
| Uber Technologies |
| Summit Materials |
Uber Technologies and Summit Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Uber Technologies and Summit Materials
The main advantage of trading using opposite Uber Technologies and Summit Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Uber Technologies position performs unexpectedly, Summit Materials 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 Summit Materials will offset losses from the drop in Summit Materials' long position.| Uber Technologies vs. Zoom Video Communications | Uber Technologies vs. Snowflake | Uber Technologies vs. Workday | Uber Technologies vs. C3 Ai Inc |
| Summit Materials vs. Martin Marietta Materials | Summit Materials vs. Vulcan Materials | Summit Materials vs. James Hardie Industries | Summit Materials vs. Eagle Materials |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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