Correlation Between Vulcan Materials and MT Bank
Can any of the company-specific risk be diversified away by investing in both Vulcan Materials and MT Bank 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 MT Bank 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 MT Bank Corp, you can compare the effects of market volatilities on Vulcan Materials and MT Bank 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 MT Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vulcan Materials and MT Bank.
Diversification Opportunities for Vulcan Materials and MT Bank
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vulcan and 0JW2 is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Vulcan Materials Co and MT Bank Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MT Bank 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 MT Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MT Bank Corp has no effect on the direction of Vulcan Materials i.e., Vulcan Materials and MT Bank go up and down completely randomly.
Pair Corralation between Vulcan Materials and MT Bank
Assuming the 90 days trading horizon Vulcan Materials is expected to generate 1.36 times less return on investment than MT Bank. In addition to that, Vulcan Materials is 1.06 times more volatile than MT Bank Corp. It trades about 0.12 of its total potential returns per unit of risk. MT Bank Corp is currently generating about 0.18 per unit of volatility. If you would invest 18,956 in MT Bank Corp on October 26, 2024 and sell it today you would earn a total of 806.00 from holding MT Bank Corp or generate 4.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 85.0% |
| Values | Daily Returns |
Vulcan Materials Co vs. MT Bank Corp
Performance |
| Timeline |
| Vulcan Materials |
| MT Bank Corp |
Vulcan Materials and MT Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vulcan Materials and MT Bank
The main advantage of trading using opposite Vulcan Materials and MT Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vulcan Materials position performs unexpectedly, MT Bank 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 MT Bank will offset losses from the drop in MT Bank's long position.| Vulcan Materials vs. Berkshire Hathaway | Vulcan Materials vs. Samsung Electronics Co | Vulcan Materials vs. Samsung Electronics Co | Vulcan Materials vs. Chocoladefabriken Lindt Spruengli |
| MT Bank vs. Jacquet Metal Service | MT Bank vs. Monster Beverage Corp | MT Bank vs. Eastinco Mining Exploration | MT Bank vs. Cornish Metals |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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