Correlation Between United Breweries and Vulcan Materials
Can any of the company-specific risk be diversified away by investing in both United Breweries 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 United Breweries and Vulcan Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Breweries Co and Vulcan Materials, you can compare the effects of market volatilities on United Breweries 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 United Breweries with a short position of Vulcan Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Breweries and Vulcan Materials.
Diversification Opportunities for United Breweries and Vulcan Materials
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between United and Vulcan is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding United Breweries Co and Vulcan Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vulcan Materials and United Breweries 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 United Breweries Co 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 United Breweries i.e., United Breweries and Vulcan Materials go up and down completely randomly.
Pair Corralation between United Breweries and Vulcan Materials
Assuming the 90 days trading horizon United Breweries Co is expected to generate 1.49 times more return on investment than Vulcan Materials. However, United Breweries is 1.49 times more volatile than Vulcan Materials. It trades about 0.01 of its potential returns per unit of risk. Vulcan Materials is currently generating about -0.34 per unit of risk. If you would invest 1,100 in United Breweries Co on October 14, 2024 and sell it today you would earn a total of 0.00 from holding United Breweries Co or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Breweries Co vs. Vulcan Materials
Performance |
| Timeline |
| United Breweries |
| Vulcan Materials |
United Breweries and Vulcan Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Breweries and Vulcan Materials
The main advantage of trading using opposite United Breweries and Vulcan Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Breweries 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.| United Breweries vs. TRI CHEMICAL LABORATINC | United Breweries vs. INDO RAMA SYNTHETIC | United Breweries vs. T MOBILE INCDL 00001 | United Breweries vs. T Mobile |
| Vulcan Materials vs. INDOFOOD AGRI RES | Vulcan Materials vs. Tyson Foods | Vulcan Materials vs. Teradata Corp | Vulcan Materials vs. Alliance Data Systems |
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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