Correlation Between Summit Materials and Bloomsbury Publishing

Can any of the company-specific risk be diversified away by investing in both Summit Materials and Bloomsbury Publishing 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 Summit Materials and Bloomsbury Publishing into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Summit Materials Cl and Bloomsbury Publishing Plc, you can compare the effects of market volatilities on Summit Materials and Bloomsbury Publishing 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 Summit Materials with a short position of Bloomsbury Publishing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Materials and Bloomsbury Publishing.

Diversification Opportunities for Summit Materials and Bloomsbury Publishing

0.16

Correlation Coefficient

Summit Materials  Bloomsbury Publishing

Average diversification

The 3 months correlation between Summit and Bloomsbury is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials Cl and Bloomsbury Publishing Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bloomsbury Publishing Plc and Summit 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 Summit Materials Cl are associated (or correlated) with Bloomsbury Publishing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bloomsbury Publishing Plc has no effect on the direction of Summit Materials i.e., Summit Materials and Bloomsbury Publishing go up and down completely randomly.

Pair Corralation between Summit Materials and Bloomsbury Publishing

Assuming the 90 days trading horizon Summit Materials Cl is expected to generate 1.08 times more return on investment than Bloomsbury Publishing. However, Summit Materials is 1.08 times more volatile than Bloomsbury Publishing Plc. It trades about 0.21 of its potential returns per unit of risk. Bloomsbury Publishing Plc is currently generating about 0.02 per unit of risk. If you would invest  3,803  in Summit Materials Cl on September 13, 2024 and sell it today you would earn a total of  1,294  from holding Summit Materials Cl or generate 34.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Summit Materials Cl  vs.  Bloomsbury Publishing Plc

Summit Materials

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Summit Materials Cl are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Summit Materials unveiled solid returns over the last few months and may actually be approaching a breakup point.

Bloomsbury Publishing Plc

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bloomsbury Publishing Plc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Bloomsbury Publishing is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Summit Materials and Bloomsbury Publishing

The main advantage of trading using opposite Summit Materials and Bloomsbury Publishing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Materials position performs unexpectedly, Bloomsbury Publishing 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 Bloomsbury Publishing will offset losses from the drop in Bloomsbury Publishing's long position.

The idea behind Summit Materials Cl and Bloomsbury Publishing Plc 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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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.