Correlation Between Vulcan Materials and Power Metal
Can any of the company-specific risk be diversified away by investing in both Vulcan Materials and Power Metal 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 Power Metal 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 Power Metal Resources, you can compare the effects of market volatilities on Vulcan Materials and Power Metal 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 Power Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vulcan Materials and Power Metal.
Diversification Opportunities for Vulcan Materials and Power Metal
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Vulcan and Power is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Vulcan Materials Co and Power Metal Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Metal Resources 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 Power Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Metal Resources has no effect on the direction of Vulcan Materials i.e., Vulcan Materials and Power Metal go up and down completely randomly.
Pair Corralation between Vulcan Materials and Power Metal
Assuming the 90 days trading horizon Vulcan Materials Co is expected to generate 0.34 times more return on investment than Power Metal. However, Vulcan Materials Co is 2.94 times less risky than Power Metal. It trades about 0.07 of its potential returns per unit of risk. Power Metal Resources is currently generating about 0.01 per unit of risk. If you would invest 20,390 in Vulcan Materials Co on September 1, 2024 and sell it today you would earn a total of 8,396 from holding Vulcan Materials Co or generate 41.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 97.88% |
| Values | Daily Returns |
Vulcan Materials Co vs. Power Metal Resources
Performance |
| Timeline |
| Vulcan Materials |
| Power Metal Resources |
Vulcan Materials and Power Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vulcan Materials and Power Metal
The main advantage of trading using opposite Vulcan Materials and Power Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vulcan Materials position performs unexpectedly, Power Metal 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 Power Metal will offset losses from the drop in Power Metal's long position.| Vulcan Materials vs. Aurora Investment Trust | Vulcan Materials vs. BW Offshore | Vulcan Materials vs. Schroders Investment Trusts | Vulcan Materials vs. Intuitive Investments Group |
| Power Metal vs. Givaudan SA | Power Metal vs. Antofagasta PLC | Power Metal vs. Centamin PLC | Power Metal vs. Atalaya Mining |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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