Correlation Between Vulcan Materials and X FAB
Can any of the company-specific risk be diversified away by investing in both Vulcan Materials and X FAB 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 X FAB 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 X FAB Silicon Foundries, you can compare the effects of market volatilities on Vulcan Materials and X FAB 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 X FAB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vulcan Materials and X FAB.
Diversification Opportunities for Vulcan Materials and X FAB
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Vulcan and 0ROZ is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Vulcan Materials Co and X FAB Silicon Foundries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on X FAB Silicon 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 X FAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of X FAB Silicon has no effect on the direction of Vulcan Materials i.e., Vulcan Materials and X FAB go up and down completely randomly.
Pair Corralation between Vulcan Materials and X FAB
Assuming the 90 days trading horizon Vulcan Materials Co is expected to generate 0.7 times more return on investment than X FAB. However, Vulcan Materials Co is 1.44 times less risky than X FAB. It trades about 0.18 of its potential returns per unit of risk. X FAB Silicon Foundries is currently generating about -0.14 per unit of risk. If you would invest 24,900 in Vulcan Materials Co on August 30, 2024 and sell it today you would earn a total of 3,760 from holding Vulcan Materials Co or generate 15.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vulcan Materials Co vs. X FAB Silicon Foundries
Performance |
| Timeline |
| Vulcan Materials |
| X FAB Silicon |
Vulcan Materials and X FAB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vulcan Materials and X FAB
The main advantage of trading using opposite Vulcan Materials and X FAB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vulcan Materials position performs unexpectedly, X FAB 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 X FAB will offset losses from the drop in X FAB's long position.| Vulcan Materials vs. Aeorema Communications Plc | Vulcan Materials vs. Fortune Brands Home | Vulcan Materials vs. Telecom Italia SpA | Vulcan Materials vs. Martin Marietta Materials |
| X FAB vs. Take Two Interactive Software | X FAB vs. bet at home AG | X FAB vs. Flow Traders NV | X FAB vs. Cognizant Technology Solutions |
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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