Correlation Between Vulcan Materials and Summit Materials
Can any of the company-specific risk be diversified away by investing in both Vulcan Materials 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 Vulcan Materials and Summit Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vulcan Materials and Summit Materials, you can compare the effects of market volatilities on Vulcan Materials 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 Vulcan Materials with a short position of Summit Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vulcan Materials and Summit Materials.
Diversification Opportunities for Vulcan Materials and Summit Materials
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Vulcan and Summit is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Vulcan Materials and Summit Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Materials and Vulcan 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 Vulcan Materials 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 Vulcan Materials i.e., Vulcan Materials and Summit Materials go up and down completely randomly.
Pair Corralation between Vulcan Materials and Summit Materials
Assuming the 90 days horizon Vulcan Materials is expected to under-perform the Summit Materials. In addition to that, Vulcan Materials is 2.61 times more volatile than Summit Materials. It trades about -0.31 of its total potential returns per unit of risk. Summit Materials is currently generating about 0.18 per unit of volatility. If you would invest 5,000 in Summit Materials on December 1, 2024 and sell it today you would earn a total of 50.00 from holding Summit Materials or generate 1.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 45.45% |
| Values | Daily Returns |
Vulcan Materials vs. Summit Materials
Performance |
| Timeline |
| Vulcan Materials |
| Summit Materials |
Risk-Adjusted Performance
OK
Weak | Strong |
Vulcan Materials and Summit Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vulcan Materials and Summit Materials
The main advantage of trading using opposite Vulcan Materials and Summit Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vulcan Materials 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.| Vulcan Materials vs. AOI Electronics Co | Vulcan Materials vs. SPORTING | Vulcan Materials vs. Richardson Electronics | Vulcan Materials vs. SOEDER SPORTFISKE AB |
| Summit Materials vs. Firan Technology Group | Summit Materials vs. Cognizant Technology Solutions | Summit Materials vs. BC TECHNOLOGY GROUP | Summit Materials vs. AviChina Industry Technology |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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