Correlation Between Vulcan Materials and General Dynamics
Can any of the company-specific risk be diversified away by investing in both Vulcan Materials and General Dynamics 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 General Dynamics 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 General Dynamics Corp, you can compare the effects of market volatilities on Vulcan Materials and General Dynamics 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 General Dynamics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vulcan Materials and General Dynamics.
Diversification Opportunities for Vulcan Materials and General Dynamics
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Vulcan and General is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Vulcan Materials Co and General Dynamics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Dynamics Corp 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 General Dynamics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Dynamics Corp has no effect on the direction of Vulcan Materials i.e., Vulcan Materials and General Dynamics go up and down completely randomly.
Pair Corralation between Vulcan Materials and General Dynamics
Assuming the 90 days trading horizon Vulcan Materials Co is expected to generate 0.4 times more return on investment than General Dynamics. However, Vulcan Materials Co is 2.51 times less risky than General Dynamics. It trades about 0.07 of its potential returns per unit of risk. General Dynamics Corp is currently generating about 0.03 per unit of risk. If you would invest 17,955 in Vulcan Materials Co on September 4, 2024 and sell it today you would earn a total of 10,738 from holding Vulcan Materials Co or generate 59.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.15% |
| Values | Daily Returns |
Vulcan Materials Co vs. General Dynamics Corp
Performance |
| Timeline |
| Vulcan Materials |
| General Dynamics Corp |
Vulcan Materials and General Dynamics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vulcan Materials and General Dynamics
The main advantage of trading using opposite Vulcan Materials and General Dynamics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vulcan Materials position performs unexpectedly, General Dynamics 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 General Dynamics will offset losses from the drop in General Dynamics' long position.| Vulcan Materials vs. Samsung Electronics Co | Vulcan Materials vs. Samsung Electronics Co | Vulcan Materials vs. Hyundai Motor | Vulcan Materials vs. Toyota Motor Corp |
| General Dynamics vs. Zegona Communications Plc | General Dynamics vs. Lendinvest PLC | General Dynamics vs. Batm Advanced Communications | General Dynamics vs. Cembra Money Bank |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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