Correlation Between Wacker Neuson and Summit Materials
Can any of the company-specific risk be diversified away by investing in both Wacker Neuson 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 Wacker Neuson and Summit Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wacker Neuson SE and Summit Materials, you can compare the effects of market volatilities on Wacker Neuson 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 Wacker Neuson with a short position of Summit Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wacker Neuson and Summit Materials.
Diversification Opportunities for Wacker Neuson and Summit Materials
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Wacker and Summit is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Wacker Neuson SE and Summit Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Materials and Wacker Neuson 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 Wacker Neuson SE 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 Wacker Neuson i.e., Wacker Neuson and Summit Materials go up and down completely randomly.
Pair Corralation between Wacker Neuson and Summit Materials
Assuming the 90 days trading horizon Wacker Neuson SE is expected to generate 1.77 times more return on investment than Summit Materials. However, Wacker Neuson is 1.77 times more volatile than Summit Materials. It trades about 0.19 of its potential returns per unit of risk. Summit Materials is currently generating about 0.25 per unit of risk. If you would invest 1,438 in Wacker Neuson SE on October 9, 2024 and sell it today you would earn a total of 64.00 from holding Wacker Neuson SE or generate 4.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wacker Neuson SE vs. Summit Materials
Performance |
| Timeline |
| Wacker Neuson SE |
| Summit Materials |
Wacker Neuson and Summit Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wacker Neuson and Summit Materials
The main advantage of trading using opposite Wacker Neuson and Summit Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wacker Neuson 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.| Wacker Neuson vs. Ryanair Holdings plc | Wacker Neuson vs. Summit Materials | Wacker Neuson vs. Pentair plc | Wacker Neuson vs. Corsair Gaming |
| Summit Materials vs. H2O Retailing | Summit Materials vs. BJs Wholesale Club | Summit Materials vs. Strategic Education | Summit Materials vs. FAST RETAIL ADR |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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