Correlation Between Vulcan Materials and Gold Road
Can any of the company-specific risk be diversified away by investing in both Vulcan Materials and Gold Road 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 Gold Road into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vulcan Materials and Gold Road Resources, you can compare the effects of market volatilities on Vulcan Materials and Gold Road 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 Gold Road. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vulcan Materials and Gold Road.
Diversification Opportunities for Vulcan Materials and Gold Road
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vulcan and Gold is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Vulcan Materials and Gold Road Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Road Resources 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 Gold Road. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Road Resources has no effect on the direction of Vulcan Materials i.e., Vulcan Materials and Gold Road go up and down completely randomly.
Pair Corralation between Vulcan Materials and Gold Road
Assuming the 90 days horizon Vulcan Materials is expected to generate 0.6 times more return on investment than Gold Road. However, Vulcan Materials is 1.67 times less risky than Gold Road. It trades about 0.06 of its potential returns per unit of risk. Gold Road Resources is currently generating about 0.02 per unit of risk. If you would invest 17,003 in Vulcan Materials on September 3, 2024 and sell it today you would earn a total of 9,997 from holding Vulcan Materials or generate 58.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vulcan Materials vs. Gold Road Resources
Performance |
| Timeline |
| Vulcan Materials |
| Gold Road Resources |
Vulcan Materials and Gold Road Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vulcan Materials and Gold Road
The main advantage of trading using opposite Vulcan Materials and Gold Road positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vulcan Materials position performs unexpectedly, Gold Road 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 Gold Road will offset losses from the drop in Gold Road's long position.| Vulcan Materials vs. Chiba Bank | Vulcan Materials vs. ANTA SPORTS PRODUCT | Vulcan Materials vs. Fukuyama Transporting Co | Vulcan Materials vs. Tradegate AG Wertpapierhandelsbank |
| Gold Road vs. ZIJIN MINH UNSPADR20 | Gold Road vs. Barrick Gold | Gold Road vs. Superior Plus Corp | Gold Road vs. NMI Holdings |
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 Stocks Directory module to find actively traded stocks across global markets.
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