Correlation Between Vulcan Materials and Home Depot
Can any of the company-specific risk be diversified away by investing in both Vulcan Materials and Home Depot 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 Vulcan Materials and Home Depot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vulcan Materials and The Home Depot, you can compare the effects of market volatilities on Vulcan Materials and Home Depot 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 Vulcan Materials with a short position of Home Depot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vulcan Materials and Home Depot.
Diversification Opportunities for Vulcan Materials and Home Depot
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Vulcan and Home is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Vulcan Materials and The Home Depot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Depot and Vulcan Materials 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 Vulcan Materials are associated (or correlated) with Home Depot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home Depot has no effect on the direction of Vulcan Materials i.e., Vulcan Materials and Home Depot go up and down completely randomly.
Pair Corralation between Vulcan Materials and Home Depot
Assuming the 90 days trading horizon Vulcan Materials is expected to generate 1.19 times more return on investment than Home Depot. However, Vulcan Materials is 1.19 times more volatile than The Home Depot. It trades about 0.03 of its potential returns per unit of risk. The Home Depot is currently generating about 0.0 per unit of risk. If you would invest 2,693 in Vulcan Materials on October 25, 2024 and sell it today you would earn a total of 16.00 from holding Vulcan Materials or generate 0.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vulcan Materials vs. The Home Depot
Performance |
| Timeline |
| Vulcan Materials |
| Home Depot |
Vulcan Materials and Home Depot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vulcan Materials and Home Depot
The main advantage of trading using opposite Vulcan Materials and Home Depot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vulcan Materials position performs unexpectedly, Home Depot 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 Home Depot will offset losses from the drop in Home Depot's long position.| Vulcan Materials vs. Unifique Telecomunicaes SA | Vulcan Materials vs. Applied Materials, | Vulcan Materials vs. Datadog, | Vulcan Materials vs. Multilaser Industrial SA |
| Home Depot vs. Delta Air Lines | Home Depot vs. Verizon Communications | Home Depot vs. United Natural Foods, | Home Depot vs. New Oriental Education |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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