Correlation Between Mercantile Investment and Vulcan Materials
Can any of the company-specific risk be diversified away by investing in both Mercantile Investment 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 Mercantile Investment and Vulcan Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Mercantile Investment and Vulcan Materials Co, you can compare the effects of market volatilities on Mercantile Investment 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 Mercantile Investment with a short position of Vulcan Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mercantile Investment and Vulcan Materials.
Diversification Opportunities for Mercantile Investment and Vulcan Materials
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Mercantile and Vulcan is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding The Mercantile Investment and Vulcan Materials Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vulcan Materials and Mercantile Investment 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 The Mercantile Investment 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 Mercantile Investment i.e., Mercantile Investment and Vulcan Materials go up and down completely randomly.
Pair Corralation between Mercantile Investment and Vulcan Materials
Assuming the 90 days trading horizon Mercantile Investment is expected to generate 2.1 times less return on investment than Vulcan Materials. But when comparing it to its historical volatility, The Mercantile Investment is 1.42 times less risky than Vulcan Materials. It trades about 0.05 of its potential returns per unit of risk. Vulcan Materials Co is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 22,017 in Vulcan Materials Co on September 12, 2024 and sell it today you would earn a total of 5,865 from holding Vulcan Materials Co or generate 26.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
The Mercantile Investment vs. Vulcan Materials Co
Performance |
| Timeline |
| The Mercantile Investment |
| Vulcan Materials |
Mercantile Investment and Vulcan Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mercantile Investment and Vulcan Materials
The main advantage of trading using opposite Mercantile Investment and Vulcan Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mercantile Investment 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.| Mercantile Investment vs. Flow Traders NV | Mercantile Investment vs. Fonix Mobile plc | Mercantile Investment vs. Dalata Hotel Group | Mercantile Investment vs. Spirent Communications plc |
| Vulcan Materials vs. Hong Kong Land | Vulcan Materials vs. Neometals | Vulcan Materials vs. Coor Service Management | Vulcan Materials vs. Fidelity Sustainable USD |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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