Correlation Between El Capitan and Summit Materials
Can any of the company-specific risk be diversified away by investing in both El Capitan 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 El Capitan and Summit Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between El Capitan Prec and Summit Materials, you can compare the effects of market volatilities on El Capitan 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 El Capitan with a short position of Summit Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of El Capitan and Summit Materials.
Diversification Opportunities for El Capitan and Summit Materials
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ECPN and Summit is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding El Capitan Prec and Summit Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Materials and El Capitan 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 El Capitan Prec 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 El Capitan i.e., El Capitan and Summit Materials go up and down completely randomly.
Pair Corralation between El Capitan and Summit Materials
If you would invest 0.01 in El Capitan Prec on January 20, 2024 and sell it today you would earn a total of 0.00 from holding El Capitan Prec or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
El Capitan Prec vs. Summit Materials
Performance |
| Timeline |
| El Capitan Prec |
| Summit Materials |
El Capitan and Summit Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with El Capitan and Summit Materials
The main advantage of trading using opposite El Capitan and Summit Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if El Capitan 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.| El Capitan vs. Alumina Limited | El Capitan vs. HUMANA INC | El Capitan vs. Aquagold International | El Capitan vs. Spring Valley Acquisition |
| Summit Materials vs. Martin Marietta Materials | Summit Materials vs. Vulcan Materials | Summit Materials vs. United States Lime | 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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