Correlation Between Grand Canyon and Vulcan Materials
Can any of the company-specific risk be diversified away by investing in both Grand Canyon 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 Grand Canyon and Vulcan Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grand Canyon Education and Vulcan Materials, you can compare the effects of market volatilities on Grand Canyon 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 Grand Canyon with a short position of Vulcan Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grand Canyon and Vulcan Materials.
Diversification Opportunities for Grand Canyon and Vulcan Materials
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Grand and Vulcan is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Grand Canyon Education and Vulcan Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vulcan Materials and Grand Canyon 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 Grand Canyon Education 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 Grand Canyon i.e., Grand Canyon and Vulcan Materials go up and down completely randomly.
Pair Corralation between Grand Canyon and Vulcan Materials
Assuming the 90 days trading horizon Grand Canyon Education is expected to generate 1.39 times more return on investment than Vulcan Materials. However, Grand Canyon is 1.39 times more volatile than Vulcan Materials. It trades about 0.31 of its potential returns per unit of risk. Vulcan Materials is currently generating about 0.23 per unit of risk. If you would invest 12,300 in Grand Canyon Education on August 29, 2024 and sell it today you would earn a total of 3,400 from holding Grand Canyon Education or generate 27.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grand Canyon Education vs. Vulcan Materials
Performance |
| Timeline |
| Grand Canyon Education |
| Vulcan Materials |
Grand Canyon and Vulcan Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grand Canyon and Vulcan Materials
The main advantage of trading using opposite Grand Canyon and Vulcan Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grand Canyon 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.| Grand Canyon vs. Apple Inc | Grand Canyon vs. Apple Inc | Grand Canyon vs. Apple Inc | Grand Canyon vs. Apple Inc |
| Vulcan Materials vs. Superior Plus Corp | Vulcan Materials vs. NMI Holdings | Vulcan Materials vs. Origin Agritech | Vulcan Materials vs. SIVERS SEMICONDUCTORS AB |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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