Correlation Between De Grey and Vulcan Energy
Can any of the company-specific risk be diversified away by investing in both De Grey and Vulcan Energy 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 De Grey and Vulcan Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between De Grey Mining and Vulcan Energy Resources, you can compare the effects of market volatilities on De Grey and Vulcan Energy 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 De Grey with a short position of Vulcan Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of De Grey and Vulcan Energy.
Diversification Opportunities for De Grey and Vulcan Energy
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between DEG and Vulcan is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding De Grey Mining and Vulcan Energy Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vulcan Energy Resources and De Grey 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 De Grey Mining are associated (or correlated) with Vulcan Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vulcan Energy Resources has no effect on the direction of De Grey i.e., De Grey and Vulcan Energy go up and down completely randomly.
Pair Corralation between De Grey and Vulcan Energy
Assuming the 90 days trading horizon De Grey is expected to generate 7.77 times less return on investment than Vulcan Energy. But when comparing it to its historical volatility, De Grey Mining is 2.04 times less risky than Vulcan Energy. It trades about 0.07 of its potential returns per unit of risk. Vulcan Energy Resources is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 533.00 in Vulcan Energy Resources on August 30, 2024 and sell it today you would earn a total of 178.00 from holding Vulcan Energy Resources or generate 33.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
De Grey Mining vs. Vulcan Energy Resources
Performance |
| Timeline |
| De Grey Mining |
| Vulcan Energy Resources |
De Grey and Vulcan Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with De Grey and Vulcan Energy
The main advantage of trading using opposite De Grey and Vulcan Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if De Grey position performs unexpectedly, Vulcan Energy 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 Energy will offset losses from the drop in Vulcan Energy's long position.| De Grey vs. Northern Star Resources | De Grey vs. Evolution Mining | De Grey vs. Bluescope Steel | De Grey vs. Aneka Tambang Tbk |
| Vulcan Energy vs. Step One Clothing | Vulcan Energy vs. Janison Education Group | Vulcan Energy vs. Computershare | Vulcan Energy vs. Embark Education Group |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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