Correlation Between Westrock Coffee and Summit Materials
Can any of the company-specific risk be diversified away by investing in both Westrock Coffee 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 Westrock Coffee and Summit Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westrock Coffee and Summit Materials, you can compare the effects of market volatilities on Westrock Coffee 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 Westrock Coffee with a short position of Summit Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westrock Coffee and Summit Materials.
Diversification Opportunities for Westrock Coffee and Summit Materials
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Westrock and Summit is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Westrock Coffee and Summit Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Materials and Westrock Coffee 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 Westrock Coffee 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 Westrock Coffee i.e., Westrock Coffee and Summit Materials go up and down completely randomly.
Pair Corralation between Westrock Coffee and Summit Materials
Given the investment horizon of 90 days Westrock Coffee is expected to generate 1.48 times more return on investment than Summit Materials. However, Westrock Coffee is 1.48 times more volatile than Summit Materials. It trades about 0.28 of its potential returns per unit of risk. Summit Materials is currently generating about 0.2 per unit of risk. If you would invest 662.00 in Westrock Coffee on August 31, 2024 and sell it today you would earn a total of 145.00 from holding Westrock Coffee or generate 21.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westrock Coffee vs. Summit Materials
Performance |
| Timeline |
| Westrock Coffee |
| Summit Materials |
Westrock Coffee and Summit Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westrock Coffee and Summit Materials
The main advantage of trading using opposite Westrock Coffee and Summit Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westrock Coffee 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.| Westrock Coffee vs. Coffee Holding Co | Westrock Coffee vs. Bridgford Foods | Westrock Coffee vs. John B Sanfilippo | Westrock Coffee vs. Treehouse Foods |
| Summit Materials vs. Martin Marietta Materials | Summit Materials vs. Vulcan Materials | Summit Materials vs. United States Lime | Summit Materials vs. James Hardie Industries |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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