Correlation Between Upper Street and Summit Materials

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

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

Diversification Opportunities for Upper Street and Summit Materials

0.0

Correlation Coefficient

Upper Street  Summit Materials

Pay attention - limited upside

The 3 months correlation between Upper and Summit is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Upper Street Marketing and Summit Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Materials and Upper Street 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 Upper Street Marketing 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 Upper Street i.e., Upper Street and Summit Materials go up and down completely randomly.

Pair Corralation between Upper Street and Summit Materials

If you would invest  3,915  in Summit Materials on September 18, 2024 and sell it today you would earn a total of  1,160  from holding Summit Materials or generate 29.63% return on investment over 90 days.

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

Upper Street Marketing  vs.  Summit Materials

Upper Street Marketing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Upper Street Marketing has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Upper Street is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Summit Materials

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Summit Materials are ranked lower than 16 (%) 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.

Pair Trading with Upper Street and Summit Materials

The main advantage of trading using opposite Upper Street and Summit Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Upper Street 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 Upper Street Marketing 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.

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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..