Correlation Between Vulcan Materials and European Metals
Can any of the company-specific risk be diversified away by investing in both Vulcan Materials and European Metals 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 European Metals 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 European Metals Holdings, you can compare the effects of market volatilities on Vulcan Materials and European Metals 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 European Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vulcan Materials and European Metals.
Diversification Opportunities for Vulcan Materials and European Metals
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Vulcan and European is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Vulcan Materials Co and European Metals Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on European Metals Holdings 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 European Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of European Metals Holdings has no effect on the direction of Vulcan Materials i.e., Vulcan Materials and European Metals go up and down completely randomly.
Pair Corralation between Vulcan Materials and European Metals
Assuming the 90 days trading horizon Vulcan Materials is expected to generate 2.0 times less return on investment than European Metals. But when comparing it to its historical volatility, Vulcan Materials Co is 2.4 times less risky than European Metals. It trades about 0.14 of its potential returns per unit of risk. European Metals Holdings is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 725.00 in European Metals Holdings on October 25, 2024 and sell it today you would earn a total of 50.00 from holding European Metals Holdings or generate 6.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Vulcan Materials Co vs. European Metals Holdings
Performance |
| Timeline |
| Vulcan Materials |
| European Metals Holdings |
Vulcan Materials and European Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vulcan Materials and European Metals
The main advantage of trading using opposite Vulcan Materials and European Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vulcan Materials position performs unexpectedly, European Metals 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 European Metals will offset losses from the drop in European Metals' long position.| Vulcan Materials vs. Bisichi Mining PLC | Vulcan Materials vs. Silver Bullet Data | Vulcan Materials vs. Nordic Semiconductor ASA | Vulcan Materials vs. Thor Mining PLC |
| European Metals vs. Gamma Communications PLC | European Metals vs. InterContinental Hotels Group | European Metals vs. mobilezone holding AG | European Metals vs. Batm Advanced Communications |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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