Correlation Between Vulcan Materials and Advanced Micro
Can any of the company-specific risk be diversified away by investing in both Vulcan Materials and Advanced Micro 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 Advanced Micro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vulcan Materials and Advanced Micro Devices, you can compare the effects of market volatilities on Vulcan Materials and Advanced Micro 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 Advanced Micro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vulcan Materials and Advanced Micro.
Diversification Opportunities for Vulcan Materials and Advanced Micro
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Vulcan and Advanced is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Vulcan Materials and Advanced Micro Devices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Micro Devices 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 Advanced Micro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Micro Devices has no effect on the direction of Vulcan Materials i.e., Vulcan Materials and Advanced Micro go up and down completely randomly.
Pair Corralation between Vulcan Materials and Advanced Micro
Assuming the 90 days horizon Vulcan Materials is expected to generate 1.35 times more return on investment than Advanced Micro. However, Vulcan Materials is 1.35 times more volatile than Advanced Micro Devices. It trades about 0.17 of its potential returns per unit of risk. Advanced Micro Devices is currently generating about -0.05 per unit of risk. If you would invest 24,954 in Vulcan Materials on September 1, 2024 and sell it today you would earn a total of 2,246 from holding Vulcan Materials or generate 9.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Vulcan Materials vs. Advanced Micro Devices
Performance |
| Timeline |
| Vulcan Materials |
| Advanced Micro Devices |
Vulcan Materials and Advanced Micro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vulcan Materials and Advanced Micro
The main advantage of trading using opposite Vulcan Materials and Advanced Micro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vulcan Materials position performs unexpectedly, Advanced Micro 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 Advanced Micro will offset losses from the drop in Advanced Micro'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 |
| Advanced Micro vs. Vulcan Materials | Advanced Micro vs. ELMOS SEMICONDUCTOR | Advanced Micro vs. TOREX SEMICONDUCTOR LTD | Advanced Micro vs. Applied Materials |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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