Correlation Between EPSILON HEALTHCARE and Vulcan Materials
Can any of the company-specific risk be diversified away by investing in both EPSILON HEALTHCARE and Vulcan Materials 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 EPSILON HEALTHCARE and Vulcan Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EPSILON HEALTHCARE LTD and Vulcan Materials, you can compare the effects of market volatilities on EPSILON HEALTHCARE and Vulcan Materials 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 EPSILON HEALTHCARE with a short position of Vulcan Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of EPSILON HEALTHCARE and Vulcan Materials.
Diversification Opportunities for EPSILON HEALTHCARE and Vulcan Materials
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between EPSILON and Vulcan is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding EPSILON HEALTHCARE LTD and Vulcan Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vulcan Materials and EPSILON HEALTHCARE 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 EPSILON HEALTHCARE LTD are associated (or correlated) with Vulcan Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vulcan Materials has no effect on the direction of EPSILON HEALTHCARE i.e., EPSILON HEALTHCARE and Vulcan Materials go up and down completely randomly.
Pair Corralation between EPSILON HEALTHCARE and Vulcan Materials
Assuming the 90 days trading horizon EPSILON HEALTHCARE LTD is expected to generate 8.53 times more return on investment than Vulcan Materials. However, EPSILON HEALTHCARE is 8.53 times more volatile than Vulcan Materials. It trades about 0.05 of its potential returns per unit of risk. Vulcan Materials is currently generating about 0.06 per unit of risk. If you would invest 1.20 in EPSILON HEALTHCARE LTD on October 1, 2024 and sell it today you would lose (0.45) from holding EPSILON HEALTHCARE LTD or give up 37.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
EPSILON HEALTHCARE LTD vs. Vulcan Materials
Performance |
| Timeline |
| EPSILON HEALTHCARE LTD |
| Vulcan Materials |
EPSILON HEALTHCARE and Vulcan Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EPSILON HEALTHCARE and Vulcan Materials
The main advantage of trading using opposite EPSILON HEALTHCARE and Vulcan Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EPSILON HEALTHCARE position performs unexpectedly, Vulcan Materials 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 Vulcan Materials will offset losses from the drop in Vulcan Materials' long position.| EPSILON HEALTHCARE vs. Gol Intelligent Airlines | EPSILON HEALTHCARE vs. Tencent Music Entertainment | EPSILON HEALTHCARE vs. Scandinavian Tobacco Group | EPSILON HEALTHCARE vs. Addus HomeCare |
| Vulcan Materials vs. SBI Insurance Group | Vulcan Materials vs. HANOVER INSURANCE | Vulcan Materials vs. ZURICH INSURANCE GROUP | Vulcan Materials vs. VIRGIN WINES UK |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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