Correlation Between Summit Materials and Siriuspoint

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

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

Diversification Opportunities for Summit Materials and Siriuspoint

0.21

Correlation Coefficient

Summit Materials  Siriuspoint

Modest diversification

The 3 months correlation between Summit and Siriuspoint is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials and Siriuspoint in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siriuspoint 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 Siriuspoint. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siriuspoint has no effect on the direction of Summit Materials i.e., Summit Materials and Siriuspoint go up and down completely randomly.

Pair Corralation between Summit Materials and Siriuspoint

Considering the 90-day investment horizon Summit Materials is expected to under-perform the Siriuspoint. In addition to that, Summit Materials is 1.07 times more volatile than Siriuspoint. It trades about -0.06 of its total potential returns per unit of risk. Siriuspoint is currently generating about 0.15 per unit of volatility. If you would invest  1,177  in Siriuspoint on February 23, 2024 and sell it today you would earn a total of  168.00  from holding Siriuspoint or generate 14.27% return on investment over 90 days.

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

Summit Materials  vs.  Siriuspoint

Summit Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Summit Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Summit Materials is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Siriuspoint

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Siriuspoint are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Siriuspoint unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Summit Materials and Siriuspoint

The main advantage of trading using opposite Summit Materials and Siriuspoint positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Materials position performs unexpectedly, Siriuspoint 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 Siriuspoint will offset losses from the drop in Siriuspoint's long position.

The idea behind Summit Materials and Siriuspoint 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.