Correlation Between Vulcan Materials and Auto Trader
Can any of the company-specific risk be diversified away by investing in both Vulcan Materials and Auto Trader 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 Auto Trader 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 Auto Trader Group, you can compare the effects of market volatilities on Vulcan Materials and Auto Trader 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 Auto Trader. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vulcan Materials and Auto Trader.
Diversification Opportunities for Vulcan Materials and Auto Trader
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Vulcan and Auto is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Vulcan Materials Co and Auto Trader Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auto Trader 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 Auto Trader. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auto Trader Group has no effect on the direction of Vulcan Materials i.e., Vulcan Materials and Auto Trader go up and down completely randomly.
Pair Corralation between Vulcan Materials and Auto Trader
Assuming the 90 days trading horizon Vulcan Materials Co is expected to generate 1.2 times more return on investment than Auto Trader. However, Vulcan Materials is 1.2 times more volatile than Auto Trader Group. It trades about 0.19 of its potential returns per unit of risk. Auto Trader Group is currently generating about -0.13 per unit of risk. If you would invest 25,780 in Vulcan Materials Co on August 26, 2024 and sell it today you would earn a total of 2,541 from holding Vulcan Materials Co or generate 9.86% 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. Auto Trader Group
Performance |
| Timeline |
| Vulcan Materials |
| Auto Trader Group |
Vulcan Materials and Auto Trader Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vulcan Materials and Auto Trader
The main advantage of trading using opposite Vulcan Materials and Auto Trader positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vulcan Materials position performs unexpectedly, Auto Trader 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 Auto Trader will offset losses from the drop in Auto Trader's 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 |
| Auto Trader vs. Ondine Biomedical | Auto Trader vs. Europa Metals | Auto Trader vs. Revolution Beauty Group | Auto Trader vs. Biome Technologies 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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