Correlation Between Vulcan Materials and New Residential
Can any of the company-specific risk be diversified away by investing in both Vulcan Materials and New Residential 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 New Residential into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vulcan Materials and New Residential Investment, you can compare the effects of market volatilities on Vulcan Materials and New Residential 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 New Residential. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vulcan Materials and New Residential.
Diversification Opportunities for Vulcan Materials and New Residential
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Vulcan and New is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Vulcan Materials and New Residential Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Residential Inve 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 New Residential. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Residential Inve has no effect on the direction of Vulcan Materials i.e., Vulcan Materials and New Residential go up and down completely randomly.
Pair Corralation between Vulcan Materials and New Residential
Assuming the 90 days horizon Vulcan Materials is expected to generate 2.22 times more return on investment than New Residential. However, Vulcan Materials is 2.22 times more volatile than New Residential Investment. It trades about 0.15 of its potential returns per unit of risk. New Residential Investment is currently generating about 0.25 per unit of risk. If you would invest 25,153 in Vulcan Materials on August 31, 2024 and sell it today you would earn a total of 2,047 from holding Vulcan Materials or generate 8.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vulcan Materials vs. New Residential Investment
Performance |
| Timeline |
| Vulcan Materials |
| New Residential Inve |
Vulcan Materials and New Residential Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vulcan Materials and New Residential
The main advantage of trading using opposite Vulcan Materials and New Residential positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vulcan Materials position performs unexpectedly, New Residential 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 New Residential will offset losses from the drop in New Residential's long position.| Vulcan Materials vs. Superior Plus Corp | Vulcan Materials vs. NMI Holdings | Vulcan Materials vs. Origin Agritech | Vulcan Materials vs. SIVERS SEMICONDUCTORS AB |
| New Residential vs. MGIC INVESTMENT | New Residential vs. Perseus Mining Limited | New Residential vs. GRIFFIN MINING LTD | New Residential vs. ECHO INVESTMENT ZY |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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