Correlation Between Medical Properties and Vulcan Materials
Can any of the company-specific risk be diversified away by investing in both Medical Properties 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 Medical Properties and Vulcan Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Medical Properties Trust and Vulcan Materials Co, you can compare the effects of market volatilities on Medical Properties 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 Medical Properties with a short position of Vulcan Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medical Properties and Vulcan Materials.
Diversification Opportunities for Medical Properties and Vulcan Materials
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Medical and Vulcan is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Medical Properties Trust and Vulcan Materials Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vulcan Materials and Medical Properties 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 Medical Properties Trust 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 Medical Properties i.e., Medical Properties and Vulcan Materials go up and down completely randomly.
Pair Corralation between Medical Properties and Vulcan Materials
Assuming the 90 days trading horizon Medical Properties is expected to generate 13.02 times less return on investment than Vulcan Materials. In addition to that, Medical Properties is 2.24 times more volatile than Vulcan Materials Co. It trades about 0.01 of its total potential returns per unit of risk. Vulcan Materials Co is currently generating about 0.15 per unit of volatility. If you would invest 24,457 in Vulcan Materials Co on September 2, 2024 and sell it today you would earn a total of 4,329 from holding Vulcan Materials Co or generate 17.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Medical Properties Trust vs. Vulcan Materials Co
Performance |
| Timeline |
| Medical Properties Trust |
| Vulcan Materials |
Medical Properties and Vulcan Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Medical Properties and Vulcan Materials
The main advantage of trading using opposite Medical Properties and Vulcan Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Medical Properties 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.| Medical Properties vs. Uniper SE | Medical Properties vs. Mulberry Group PLC | Medical Properties vs. London Security Plc | Medical Properties vs. Triad Group PLC |
| Vulcan Materials vs. Uniper SE | Vulcan Materials vs. Mulberry Group PLC | Vulcan Materials vs. London Security Plc | Vulcan Materials vs. Triad Group PLC |
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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