Correlation Between Copperbank Resources and Summit Materials

Can any of the company-specific risk be diversified away by investing in both Copperbank Resources 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 Copperbank Resources and Summit Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Copperbank Resources Corp and Summit Materials, you can compare the effects of market volatilities on Copperbank Resources 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 Copperbank Resources with a short position of Summit Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Copperbank Resources and Summit Materials.

Diversification Opportunities for Copperbank Resources and Summit Materials

0.16

Correlation Coefficient

Copperbank Resources  Summit Materials

Average diversification

The 3 months correlation between Copperbank and Summit is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Copperbank Resources Corp and Summit Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Materials and Copperbank Resources 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 Copperbank Resources Corp 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 Copperbank Resources i.e., Copperbank Resources and Summit Materials go up and down completely randomly.

Pair Corralation between Copperbank Resources and Summit Materials

Assuming the 90 days horizon Copperbank Resources Corp is expected to generate 2.35 times more return on investment than Summit Materials. However, Copperbank Resources is 2.35 times more volatile than Summit Materials. It trades about 0.14 of its potential returns per unit of risk. Summit Materials is currently generating about 0.07 per unit of risk. If you would invest  38.00  in Copperbank Resources Corp on January 19, 2024 and sell it today you would earn a total of  16.00  from holding Copperbank Resources Corp or generate 42.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Copperbank Resources Corp  vs.  Summit Materials

Copperbank Resources Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Copperbank Resources Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak forward-looking signals, Copperbank Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Summit Materials

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Summit Materials are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Summit Materials may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Copperbank Resources and Summit Materials

The main advantage of trading using opposite Copperbank Resources and Summit Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Copperbank Resources 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.

The idea behind Copperbank Resources Corp and Summit Materials pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.