Correlation Between LION ONE and Vulcan Materials

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Can any of the company-specific risk be diversified away by investing in both LION ONE 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 LION ONE and Vulcan Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LION ONE METALS and Vulcan Materials, you can compare the effects of market volatilities on LION ONE 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 LION ONE with a short position of Vulcan Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of LION ONE and Vulcan Materials.

Diversification Opportunities for LION ONE and Vulcan Materials

-0.47
  Correlation Coefficient

Very good diversification

The 3 months correlation between LION and Vulcan is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding LION ONE METALS and Vulcan Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vulcan Materials and LION ONE 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 LION ONE METALS 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 LION ONE i.e., LION ONE and Vulcan Materials go up and down completely randomly.

Pair Corralation between LION ONE and Vulcan Materials

Assuming the 90 days trading horizon LION ONE METALS is expected to under-perform the Vulcan Materials. In addition to that, LION ONE is 3.7 times more volatile than Vulcan Materials. It trades about -0.15 of its total potential returns per unit of risk. Vulcan Materials is currently generating about -0.08 per unit of volatility. If you would invest  27,000  in Vulcan Materials on September 13, 2024 and sell it today you would lose (600.00) from holding Vulcan Materials or give up 2.22% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy95.65%
ValuesDaily Returns

LION ONE METALS  vs.  Vulcan Materials

 Performance 
       Timeline  
LION ONE METALS 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days LION ONE METALS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.
Vulcan Materials 

Risk-Adjusted Performance

14 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Vulcan Materials are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Vulcan Materials reported solid returns over the last few months and may actually be approaching a breakup point.

LION ONE and Vulcan Materials Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with LION ONE and Vulcan Materials

The main advantage of trading using opposite LION ONE and Vulcan Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LION ONE 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.
The idea behind LION ONE METALS and Vulcan Materials pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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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