Correlation Between Summit Materials and Hecla Mining
Can any of the company-specific risk be diversified away by investing in both Summit Materials and Hecla Mining 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 Hecla Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Materials and Hecla Mining, you can compare the effects of market volatilities on Summit Materials and Hecla Mining 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 Hecla Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Materials and Hecla Mining.
Diversification Opportunities for Summit Materials and Hecla Mining
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Summit and Hecla is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials and Hecla Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hecla Mining 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 Hecla Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hecla Mining has no effect on the direction of Summit Materials i.e., Summit Materials and Hecla Mining go up and down completely randomly.
Pair Corralation between Summit Materials and Hecla Mining
Considering the 90-day investment horizon Summit Materials is expected to under-perform the Hecla Mining. But the stock apears to be less risky and, when comparing its historical volatility, Summit Materials is 2.34 times less risky than Hecla Mining. The stock trades about -0.34 of its potential returns per unit of risk. The Hecla Mining is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 426.00 in Hecla Mining on January 24, 2024 and sell it today you would earn a total of 80.00 from holding Hecla Mining or generate 18.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Summit Materials vs. Hecla Mining
Performance |
| Timeline |
| Summit Materials |
| Hecla Mining |
Summit Materials and Hecla Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Materials and Hecla Mining
The main advantage of trading using opposite Summit Materials and Hecla Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Materials position performs unexpectedly, Hecla Mining 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 Hecla Mining will offset losses from the drop in Hecla Mining's long position.| Summit Materials vs. Martin Marietta Materials | Summit Materials vs. Vulcan Materials | Summit Materials vs. United States Lime | Summit Materials vs. James Hardie Industries |
| Hecla Mining vs. SilverCrest Metals | Hecla Mining vs. Avino Silver Gold | Hecla Mining vs. New Pacific Metals | Hecla Mining vs. Gatos Silver |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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