Correlation Between Vulcan Materials and United Parcel
Can any of the company-specific risk be diversified away by investing in both Vulcan Materials and United Parcel 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 United Parcel 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 United Parcel Service, you can compare the effects of market volatilities on Vulcan Materials and United Parcel 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 United Parcel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vulcan Materials and United Parcel.
Diversification Opportunities for Vulcan Materials and United Parcel
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Vulcan and United is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Vulcan Materials Co and United Parcel Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Parcel Service 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 United Parcel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Parcel Service has no effect on the direction of Vulcan Materials i.e., Vulcan Materials and United Parcel go up and down completely randomly.
Pair Corralation between Vulcan Materials and United Parcel
Assuming the 90 days trading horizon Vulcan Materials Co is expected to generate 0.99 times more return on investment than United Parcel. However, Vulcan Materials Co is 1.01 times less risky than United Parcel. It trades about 0.05 of its potential returns per unit of risk. United Parcel Service is currently generating about -0.03 per unit of risk. If you would invest 17,566 in Vulcan Materials Co on October 12, 2024 and sell it today you would earn a total of 7,518 from holding Vulcan Materials Co or generate 42.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.39% |
| Values | Daily Returns |
Vulcan Materials Co vs. United Parcel Service
Performance |
| Timeline |
| Vulcan Materials |
| United Parcel Service |
Vulcan Materials and United Parcel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vulcan Materials and United Parcel
The main advantage of trading using opposite Vulcan Materials and United Parcel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vulcan Materials position performs unexpectedly, United Parcel 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 United Parcel will offset losses from the drop in United Parcel's long position.| Vulcan Materials vs. Livermore Investments Group | Vulcan Materials vs. Tavistock Investments Plc | Vulcan Materials vs. EJF Investments | Vulcan Materials vs. Tatton Asset Management |
| United Parcel vs. Vulcan Materials Co | United Parcel vs. AMG Advanced Metallurgical | United Parcel vs. First Class Metals | United Parcel vs. Capital Metals 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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