Correlation Between Vulcan Materials and Naked Wines
Can any of the company-specific risk be diversified away by investing in both Vulcan Materials and Naked Wines 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 Naked Wines 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 Naked Wines plc, you can compare the effects of market volatilities on Vulcan Materials and Naked Wines 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 Naked Wines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vulcan Materials and Naked Wines.
Diversification Opportunities for Vulcan Materials and Naked Wines
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Vulcan and Naked is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Vulcan Materials Co and Naked Wines plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Naked Wines plc 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 Naked Wines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Naked Wines plc has no effect on the direction of Vulcan Materials i.e., Vulcan Materials and Naked Wines go up and down completely randomly.
Pair Corralation between Vulcan Materials and Naked Wines
Assuming the 90 days trading horizon Vulcan Materials Co is expected to generate 1.35 times more return on investment than Naked Wines. However, Vulcan Materials is 1.35 times more volatile than Naked Wines plc. It trades about 0.2 of its potential returns per unit of risk. Naked Wines plc is currently generating about -0.22 per unit of risk. If you would invest 25,976 in Vulcan Materials Co on August 30, 2024 and sell it today you would earn a total of 2,684 from holding Vulcan Materials Co or generate 10.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Vulcan Materials Co vs. Naked Wines plc
Performance |
| Timeline |
| Vulcan Materials |
| Naked Wines plc |
Vulcan Materials and Naked Wines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vulcan Materials and Naked Wines
The main advantage of trading using opposite Vulcan Materials and Naked Wines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vulcan Materials position performs unexpectedly, Naked Wines 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 Naked Wines will offset losses from the drop in Naked Wines' 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 |
| Naked Wines vs. Mulberry Group PLC | Naked Wines vs. London Security Plc | Naked Wines vs. Triad Group PLC | Naked Wines vs. World Chess 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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