Correlation Between Summit Materials and 049560AW5

Can any of the company-specific risk be diversified away by investing in both Summit Materials and 049560AW5 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 049560AW5 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Summit Materials and ATO 285 15 FEB 52, you can compare the effects of market volatilities on Summit Materials and 049560AW5 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 049560AW5. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Materials and 049560AW5.

Diversification Opportunities for Summit Materials and 049560AW5

-0.46

Correlation Coefficient

Summit Materials  049560AW5

Very good diversification

The 3 months correlation between Summit and 049560AW5 is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials and ATO 285 15 FEB 52 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATO 285 15 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 are associated (or correlated) with 049560AW5. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATO 285 15 has no effect on the direction of Summit Materials i.e., Summit Materials and 049560AW5 go up and down completely randomly.

Pair Corralation between Summit Materials and 049560AW5

Considering the 90-day investment horizon Summit Materials is expected to under-perform the 049560AW5. But the stock apears to be less risky and, when comparing its historical volatility, Summit Materials is 10.69 times less risky than 049560AW5. The stock trades about -0.19 of its potential returns per unit of risk. The ATO 285 15 FEB 52 is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  6,427  in ATO 285 15 FEB 52 on September 28, 2024 and sell it today you would earn a total of  190.00  from holding ATO 285 15 FEB 52 or generate 2.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	71.43%
Values	Daily Returns

Summit Materials  vs.  ATO 285 15 FEB 52

Summit Materials

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Summit Materials are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Summit Materials displayed solid returns over the last few months and may actually be approaching a breakup point.

ATO 285 15

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ATO 285 15 FEB 52 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 049560AW5 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Summit Materials and 049560AW5

The main advantage of trading using opposite Summit Materials and 049560AW5 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Materials position performs unexpectedly, 049560AW5 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 049560AW5 will offset losses from the drop in 049560AW5's long position.

The idea behind Summit Materials and ATO 285 15 FEB 52 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.

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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.