Correlation Between European Metals and Vulcan Materials
Can any of the company-specific risk be diversified away by investing in both European Metals 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 European Metals and Vulcan Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between European Metals Holdings and Vulcan Materials Co, you can compare the effects of market volatilities on European Metals 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 European Metals with a short position of Vulcan Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of European Metals and Vulcan Materials.
Diversification Opportunities for European Metals and Vulcan Materials
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between European and Vulcan is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding European Metals Holdings and Vulcan Materials Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vulcan Materials and European Metals 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 European Metals Holdings 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 European Metals i.e., European Metals and Vulcan Materials go up and down completely randomly.
Pair Corralation between European Metals and Vulcan Materials
Assuming the 90 days trading horizon European Metals Holdings is expected to under-perform the Vulcan Materials. In addition to that, European Metals is 2.57 times more volatile than Vulcan Materials Co. It trades about -0.11 of its total potential returns per unit of risk. Vulcan Materials Co is currently generating about 0.06 per unit of volatility. If you would invest 21,805 in Vulcan Materials Co on August 28, 2024 and sell it today you would earn a total of 7,228 from holding Vulcan Materials Co or generate 33.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.03% |
| Values | Daily Returns |
European Metals Holdings vs. Vulcan Materials Co
Performance |
| Timeline |
| European Metals Holdings |
| Vulcan Materials |
European Metals and Vulcan Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with European Metals and Vulcan Materials
The main advantage of trading using opposite European Metals and Vulcan Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if European Metals 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.| European Metals vs. Givaudan SA | European Metals vs. Antofagasta PLC | European Metals vs. Centamin PLC | European Metals vs. Atalaya Mining |
| Vulcan Materials vs. Samsung Electronics Co | Vulcan Materials vs. Samsung Electronics Co | Vulcan Materials vs. Hyundai Motor | Vulcan Materials vs. Toyota Motor Corp |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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