Correlation Between Summit Materials and ReTo Eco
Can any of the company-specific risk be diversified away by investing in both Summit Materials and ReTo Eco 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 ReTo Eco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Materials and ReTo Eco Solutions, you can compare the effects of market volatilities on Summit Materials and ReTo Eco 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 ReTo Eco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Materials and ReTo Eco.
Diversification Opportunities for Summit Materials and ReTo Eco
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Summit and ReTo is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials and ReTo Eco Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ReTo Eco Solutions 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 ReTo Eco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ReTo Eco Solutions has no effect on the direction of Summit Materials i.e., Summit Materials and ReTo Eco go up and down completely randomly.
Pair Corralation between Summit Materials and ReTo Eco
Considering the 90-day investment horizon Summit Materials is expected to generate 19.55 times less return on investment than ReTo Eco. But when comparing it to its historical volatility, Summit Materials is 3.67 times less risky than ReTo Eco. It trades about 0.09 of its potential returns per unit of risk. ReTo Eco Solutions is currently generating about 0.5 of returns per unit of risk over similar time horizon. If you would invest 97.00 in ReTo Eco Solutions on February 20, 2024 and sell it today you would earn a total of 86.00 from holding ReTo Eco Solutions or generate 88.66% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Summit Materials vs. ReTo Eco Solutions
Performance |
Timeline |
Summit Materials |
ReTo Eco Solutions |
Summit Materials and ReTo Eco Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Summit Materials and ReTo Eco
The main advantage of trading using opposite Summit Materials and ReTo Eco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Materials position performs unexpectedly, ReTo Eco 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 ReTo Eco will offset losses from the drop in ReTo Eco's long position.Summit Materials vs. Martin Marietta Materials | Summit Materials vs. United States Lime | Summit Materials vs. James Hardie Industries | Summit Materials vs. Loma Negra Compania |
ReTo Eco vs. Martin Marietta Materials | ReTo Eco vs. Vulcan Materials | ReTo Eco vs. Summit Materials | ReTo Eco vs. United States Lime |
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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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