Correlation Between Hecla Mining and Summit Materials
Can any of the company-specific risk be diversified away by investing in both Hecla Mining 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 Hecla Mining and Summit Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hecla Mining and Summit Materials, you can compare the effects of market volatilities on Hecla Mining 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 Hecla Mining with a short position of Summit Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hecla Mining and Summit Materials.
Diversification Opportunities for Hecla Mining and Summit Materials
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Hecla and Summit is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Hecla Mining and Summit Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Materials and Hecla Mining 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 Hecla Mining 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 Hecla Mining i.e., Hecla Mining and Summit Materials go up and down completely randomly.
Pair Corralation between Hecla Mining and Summit Materials
Allowing for the 90-day total investment horizon Hecla Mining is expected to generate 2.32 times more return on investment than Summit Materials. However, Hecla Mining is 2.32 times more volatile than Summit Materials. It trades about 0.32 of its potential returns per unit of risk. Summit Materials is currently generating about -0.35 per unit of risk. If you would invest 423.00 in Hecla Mining on January 26, 2024 and sell it today you would earn a total of 101.00 from holding Hecla Mining or generate 23.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hecla Mining vs. Summit Materials
Performance |
| Timeline |
| Hecla Mining |
| Summit Materials |
Hecla Mining and Summit Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hecla Mining and Summit Materials
The main advantage of trading using opposite Hecla Mining and Summit Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hecla Mining 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.| Hecla Mining vs. SilverCrest Metals | Hecla Mining vs. McEwen Mining | Hecla Mining vs. Metalla Royalty Streaming | Hecla Mining vs. Endeavour Silver Corp |
| 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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