Correlation Between Summit Materials and Vulcan Materials
Can any of the company-specific risk be diversified away by investing in both Summit Materials and Vulcan 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 Summit Materials and Vulcan Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Materials and Vulcan Materials, you can compare the effects of market volatilities on Summit Materials and Vulcan 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 Summit Materials with a short position of Vulcan Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Materials and Vulcan Materials.
Diversification Opportunities for Summit Materials and Vulcan Materials
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Summit and Vulcan is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials and Vulcan Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vulcan Materials 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 Vulcan Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vulcan Materials has no effect on the direction of Summit Materials i.e., Summit Materials and Vulcan Materials go up and down completely randomly.
Pair Corralation between Summit Materials and Vulcan Materials
Considering the 90-day investment horizon Summit Materials is expected to under-perform the Vulcan Materials. In addition to that, Summit Materials is 1.74 times more volatile than Vulcan Materials. It trades about -0.32 of its total potential returns per unit of risk. Vulcan Materials is currently generating about -0.33 per unit of volatility. If you would invest 27,174 in Vulcan Materials on January 20, 2024 and sell it today you would lose (1,667) from holding Vulcan Materials or give up 6.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Summit Materials vs. Vulcan Materials
Performance |
| Timeline |
| Summit Materials |
| Vulcan Materials |
Summit Materials and Vulcan Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Materials and Vulcan Materials
The main advantage of trading using opposite Summit Materials and Vulcan Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Materials position performs unexpectedly, Vulcan 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 Vulcan Materials will offset losses from the drop in Vulcan Materials' 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 |
| Vulcan Materials vs. Eagle Materials | Vulcan Materials vs. CRH PLC ADR | Vulcan Materials vs. Summit Materials | Vulcan Materials vs. Cemex SAB de |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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