Correlation Between STORE ELECTRONIC and VULCAN MATERIALS
Can any of the company-specific risk be diversified away by investing in both STORE ELECTRONIC 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 STORE ELECTRONIC and VULCAN MATERIALS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STORE ELECTRONIC and VULCAN MATERIALS, you can compare the effects of market volatilities on STORE ELECTRONIC 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 STORE ELECTRONIC with a short position of VULCAN MATERIALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of STORE ELECTRONIC and VULCAN MATERIALS.
Diversification Opportunities for STORE ELECTRONIC and VULCAN MATERIALS
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between STORE and VULCAN is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding STORE ELECTRONIC and VULCAN MATERIALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VULCAN MATERIALS and STORE ELECTRONIC 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 STORE ELECTRONIC 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 STORE ELECTRONIC i.e., STORE ELECTRONIC and VULCAN MATERIALS go up and down completely randomly.
Pair Corralation between STORE ELECTRONIC and VULCAN MATERIALS
Assuming the 90 days trading horizon STORE ELECTRONIC is expected to generate 3.16 times more return on investment than VULCAN MATERIALS. However, STORE ELECTRONIC is 3.16 times more volatile than VULCAN MATERIALS. It trades about 0.38 of its potential returns per unit of risk. VULCAN MATERIALS is currently generating about -0.25 per unit of risk. If you would invest 13,510 in STORE ELECTRONIC on October 16, 2024 and sell it today you would earn a total of 3,730 from holding STORE ELECTRONIC or generate 27.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
STORE ELECTRONIC vs. VULCAN MATERIALS
Performance |
| Timeline |
| STORE ELECTRONIC |
| VULCAN MATERIALS |
STORE ELECTRONIC and VULCAN MATERIALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STORE ELECTRONIC and VULCAN MATERIALS
The main advantage of trading using opposite STORE ELECTRONIC and VULCAN MATERIALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STORE ELECTRONIC 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's long position.| STORE ELECTRONIC vs. Electronic Arts | STORE ELECTRONIC vs. Sch Environnement SA | STORE ELECTRONIC vs. CALTAGIRONE EDITORE | STORE ELECTRONIC vs. Nanjing Panda Electronics |
| VULCAN MATERIALS vs. AOYAMA TRADING | VULCAN MATERIALS vs. CarsalesCom | VULCAN MATERIALS vs. CDL INVESTMENT | VULCAN MATERIALS vs. Japan Asia Investment |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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