Correlation Between Summit Materials and Celestica
Can any of the company-specific risk be diversified away by investing in both Summit Materials and Celestica 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 Celestica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Materials and Celestica, you can compare the effects of market volatilities on Summit Materials and Celestica 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 Celestica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Materials and Celestica.
Diversification Opportunities for Summit Materials and Celestica
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Summit and Celestica is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials and Celestica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Celestica 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 Celestica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Celestica has no effect on the direction of Summit Materials i.e., Summit Materials and Celestica go up and down completely randomly.
Pair Corralation between Summit Materials and Celestica
Considering the 90-day investment horizon Summit Materials is expected to under-perform the Celestica. But the stock apears to be less risky and, when comparing its historical volatility, Summit Materials is 1.86 times less risky than Celestica. The stock trades about -0.28 of its potential returns per unit of risk. The Celestica is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 4,302 in Celestica on January 19, 2024 and sell it today you would earn a total of 79.00 from holding Celestica or generate 1.84% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Summit Materials vs. Celestica
Performance |
Timeline |
Summit Materials |
Celestica |
Summit Materials and Celestica Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Summit Materials and Celestica
The main advantage of trading using opposite Summit Materials and Celestica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Materials position performs unexpectedly, Celestica 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 Celestica will offset losses from the drop in Celestica's long position.Summit Materials vs. James Hardie Industries | Summit Materials vs. Loma Negra Compania | Summit Materials vs. Eagle Materials | Summit Materials vs. Cementos Pacasmayo SAA |
Celestica vs. Plexus Corp | Celestica vs. Benchmark Electronics | Celestica vs. Flex | Celestica vs. Jabil Circuit |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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