Correlation Between Aspen Aerogels and Summit Materials
Can any of the company-specific risk be diversified away by investing in both Aspen Aerogels 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 Aspen Aerogels and Summit Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aspen Aerogels and Summit Materials, you can compare the effects of market volatilities on Aspen Aerogels 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 Aspen Aerogels with a short position of Summit Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aspen Aerogels and Summit Materials.
Diversification Opportunities for Aspen Aerogels and Summit Materials
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Aspen and Summit is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Aspen Aerogels and Summit Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Materials and Aspen Aerogels 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 Aspen Aerogels 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 Aspen Aerogels i.e., Aspen Aerogels and Summit Materials go up and down completely randomly.
Pair Corralation between Aspen Aerogels and Summit Materials
Given the investment horizon of 90 days Aspen Aerogels is expected to generate 2.28 times more return on investment than Summit Materials. However, Aspen Aerogels is 2.28 times more volatile than Summit Materials. It trades about 0.08 of its potential returns per unit of risk. Summit Materials is currently generating about -0.28 per unit of risk. If you would invest 1,583 in Aspen Aerogels on January 25, 2024 and sell it today you would earn a total of 81.00 from holding Aspen Aerogels or generate 5.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aspen Aerogels vs. Summit Materials
Performance |
| Timeline |
| Aspen Aerogels |
| Summit Materials |
Aspen Aerogels and Summit Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aspen Aerogels and Summit Materials
The main advantage of trading using opposite Aspen Aerogels and Summit Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aspen Aerogels 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.| Aspen Aerogels vs. Apyx Medical | Aspen Aerogels vs. Century Communities | Aspen Aerogels vs. Ardmore Shpng | Aspen Aerogels vs. American Assets Trust |
| Summit Materials vs. Eagle Materials | Summit Materials vs. CRH PLC ADR | Summit Materials vs. Cemex SAB de | 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 CEOs Directory module to screen CEOs from public companies around the world.
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