Correlation Between Vulcan Materials and Cars
Can any of the company-specific risk be diversified away by investing in both Vulcan Materials and Cars 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 Vulcan Materials and Cars into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vulcan Materials Co and Cars Inc, you can compare the effects of market volatilities on Vulcan Materials and Cars 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 Vulcan Materials with a short position of Cars. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vulcan Materials and Cars.
Diversification Opportunities for Vulcan Materials and Cars
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Vulcan and Cars is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Vulcan Materials Co and Cars Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cars Inc and Vulcan 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 Vulcan Materials Co are associated (or correlated) with Cars. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cars Inc has no effect on the direction of Vulcan Materials i.e., Vulcan Materials and Cars go up and down completely randomly.
Pair Corralation between Vulcan Materials and Cars
Assuming the 90 days trading horizon Vulcan Materials Co is expected to generate 0.51 times more return on investment than Cars. However, Vulcan Materials Co is 1.96 times less risky than Cars. It trades about 0.07 of its potential returns per unit of risk. Cars Inc is currently generating about 0.0 per unit of risk. If you would invest 25,044 in Vulcan Materials Co on September 3, 2024 and sell it today you would earn a total of 3,742 from holding Vulcan Materials Co or generate 14.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 55.04% |
| Values | Daily Returns |
Vulcan Materials Co vs. Cars Inc
Performance |
| Timeline |
| Vulcan Materials |
| Cars Inc |
Vulcan Materials and Cars Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vulcan Materials and Cars
The main advantage of trading using opposite Vulcan Materials and Cars positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vulcan Materials position performs unexpectedly, Cars 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 Cars will offset losses from the drop in Cars' long position.| Vulcan Materials vs. Catalyst Media Group | Vulcan Materials vs. CATLIN GROUP | Vulcan Materials vs. Magnora ASA | Vulcan Materials vs. RTW Venture Fund |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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