Correlation Between Wienerberger Baustoffindustri and Summit Materials
Can any of the company-specific risk be diversified away by investing in both Wienerberger Baustoffindustri 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 Wienerberger Baustoffindustri and Summit Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wienerberger Baustoffindustrie and Summit Materials, you can compare the effects of market volatilities on Wienerberger Baustoffindustri 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 Wienerberger Baustoffindustri with a short position of Summit Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wienerberger Baustoffindustri and Summit Materials.
Diversification Opportunities for Wienerberger Baustoffindustri and Summit Materials
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Wienerberger and Summit is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Wienerberger Baustoffindustrie and Summit Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Materials and Wienerberger Baustoffindustri 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 Wienerberger Baustoffindustrie 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 Wienerberger Baustoffindustri i.e., Wienerberger Baustoffindustri and Summit Materials go up and down completely randomly.
Pair Corralation between Wienerberger Baustoffindustri and Summit Materials
Assuming the 90 days horizon Wienerberger Baustoffindustrie is expected to under-perform the Summit Materials. In addition to that, Wienerberger Baustoffindustri is 1.47 times more volatile than Summit Materials. It trades about -0.02 of its total potential returns per unit of risk. Summit Materials is currently generating about 0.2 per unit of volatility. If you would invest 4,642 in Summit Materials on August 31, 2024 and sell it today you would earn a total of 467.00 from holding Summit Materials or generate 10.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wienerberger Baustoffindustrie vs. Summit Materials
Performance |
| Timeline |
| Wienerberger Baustoffindustri |
| Summit Materials |
Wienerberger Baustoffindustri and Summit Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wienerberger Baustoffindustri and Summit Materials
The main advantage of trading using opposite Wienerberger Baustoffindustri and Summit Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wienerberger Baustoffindustri 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.The idea behind Wienerberger Baustoffindustrie and Summit Materials pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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