Correlation Between Vulcan Materials and Scandic Hotels
Can any of the company-specific risk be diversified away by investing in both Vulcan Materials and Scandic Hotels 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 Scandic Hotels 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 Scandic Hotels Group, you can compare the effects of market volatilities on Vulcan Materials and Scandic Hotels 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 Scandic Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vulcan Materials and Scandic Hotels.
Diversification Opportunities for Vulcan Materials and Scandic Hotels
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Vulcan and Scandic is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Vulcan Materials Co and Scandic Hotels Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandic Hotels Group 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 Scandic Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scandic Hotels Group has no effect on the direction of Vulcan Materials i.e., Vulcan Materials and Scandic Hotels go up and down completely randomly.
Pair Corralation between Vulcan Materials and Scandic Hotels
Assuming the 90 days trading horizon Vulcan Materials Co is expected to under-perform the Scandic Hotels. In addition to that, Vulcan Materials is 1.26 times more volatile than Scandic Hotels Group. It trades about -0.22 of its total potential returns per unit of risk. Scandic Hotels Group is currently generating about 0.07 per unit of volatility. If you would invest 6,589 in Scandic Hotels Group on October 11, 2024 and sell it today you would earn a total of 114.00 from holding Scandic Hotels Group or generate 1.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Vulcan Materials Co vs. Scandic Hotels Group
Performance |
| Timeline |
| Vulcan Materials |
| Scandic Hotels Group |
Vulcan Materials and Scandic Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vulcan Materials and Scandic Hotels
The main advantage of trading using opposite Vulcan Materials and Scandic Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vulcan Materials position performs unexpectedly, Scandic Hotels 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 Scandic Hotels will offset losses from the drop in Scandic Hotels' long position.| Vulcan Materials vs. Iron Mountain | Vulcan Materials vs. Coeur Mining | Vulcan Materials vs. Panther Metals PLC | Vulcan Materials vs. Taiwan Semiconductor Manufacturing |
| Scandic Hotels vs. Empire Metals Limited | Scandic Hotels vs. Various Eateries PLC | Scandic Hotels vs. Morgan Advanced Materials | Scandic Hotels vs. Vulcan Materials Co |
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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