Correlation Between Vulcan Materials and Canadian Natural
Can any of the company-specific risk be diversified away by investing in both Vulcan Materials and Canadian Natural 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 Canadian Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vulcan Materials and Canadian Natural Resources, you can compare the effects of market volatilities on Vulcan Materials and Canadian Natural 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 Canadian Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vulcan Materials and Canadian Natural.
Diversification Opportunities for Vulcan Materials and Canadian Natural
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Vulcan and Canadian is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Vulcan Materials and Canadian Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Natural Res 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 Canadian Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian Natural Res has no effect on the direction of Vulcan Materials i.e., Vulcan Materials and Canadian Natural go up and down completely randomly.
Pair Corralation between Vulcan Materials and Canadian Natural
Assuming the 90 days horizon Vulcan Materials is expected to generate 0.91 times more return on investment than Canadian Natural. However, Vulcan Materials is 1.1 times less risky than Canadian Natural. It trades about 0.06 of its potential returns per unit of risk. Canadian Natural Resources is currently generating about 0.04 per unit of risk. If you would invest 16,480 in Vulcan Materials on October 22, 2024 and sell it today you would earn a total of 9,720 from holding Vulcan Materials or generate 58.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Vulcan Materials vs. Canadian Natural Resources
Performance |
| Timeline |
| Vulcan Materials |
| Canadian Natural Res |
Vulcan Materials and Canadian Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vulcan Materials and Canadian Natural
The main advantage of trading using opposite Vulcan Materials and Canadian Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vulcan Materials position performs unexpectedly, Canadian Natural 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 Canadian Natural will offset losses from the drop in Canadian Natural's long position.| Vulcan Materials vs. Check Point Software | Vulcan Materials vs. AXWAY SOFTWARE EO | Vulcan Materials vs. CHEMICAL INDUSTRIES | Vulcan Materials vs. Easy Software AG |
| Canadian Natural vs. IMAGIN MEDICAL INC | Canadian Natural vs. AECOM TECHNOLOGY | Canadian Natural vs. DXC Technology Co | Canadian Natural vs. Diamyd Medical AB |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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