Correlation Between Bloomsbury Publishing and Summit Materials

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

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

Diversification Opportunities for Bloomsbury Publishing and Summit Materials

0.16

Correlation Coefficient

Bloomsbury Publishing  Summit Materials

Average diversification

The 3 months correlation between Bloomsbury and Summit is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Bloomsbury Publishing Plc and Summit Materials Cl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Materials and Bloomsbury Publishing 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 Bloomsbury Publishing Plc 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 Bloomsbury Publishing i.e., Bloomsbury Publishing and Summit Materials go up and down completely randomly.

Pair Corralation between Bloomsbury Publishing and Summit Materials

Assuming the 90 days trading horizon Bloomsbury Publishing is expected to generate 11.38 times less return on investment than Summit Materials. But when comparing it to its historical volatility, Bloomsbury Publishing Plc is 1.09 times less risky than Summit Materials. It trades about 0.02 of its potential returns per unit of risk. Summit Materials Cl is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  3,765  in Summit Materials Cl on September 12, 2024 and sell it today you would earn a total of  1,326  from holding Summit Materials Cl or generate 35.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Bloomsbury Publishing Plc  vs.  Summit Materials Cl

Bloomsbury Publishing Plc

Risk-Adjusted Performance

1 of 100

Very 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.

Summit Materials

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Summit Materials Cl are ranked lower than 17 (%) 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.

Pair Trading with Bloomsbury Publishing and Summit Materials

The main advantage of trading using opposite Bloomsbury Publishing and Summit Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bloomsbury Publishing 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 Bloomsbury Publishing Plc and Summit Materials Cl 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.