Correlation Between Vulcan Materials and Compagnie Plastic
Can any of the company-specific risk be diversified away by investing in both Vulcan Materials and Compagnie Plastic 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 Compagnie Plastic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vulcan Materials and Compagnie Plastic Omnium, you can compare the effects of market volatilities on Vulcan Materials and Compagnie Plastic 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 Compagnie Plastic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vulcan Materials and Compagnie Plastic.
Diversification Opportunities for Vulcan Materials and Compagnie Plastic
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Vulcan and Compagnie is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Vulcan Materials and Compagnie Plastic Omnium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie Plastic Omnium 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 Compagnie Plastic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie Plastic Omnium has no effect on the direction of Vulcan Materials i.e., Vulcan Materials and Compagnie Plastic go up and down completely randomly.
Pair Corralation between Vulcan Materials and Compagnie Plastic
Assuming the 90 days horizon Vulcan Materials is expected to generate 0.71 times more return on investment than Compagnie Plastic. However, Vulcan Materials is 1.42 times less risky than Compagnie Plastic. It trades about 0.09 of its potential returns per unit of risk. Compagnie Plastic Omnium is currently generating about -0.02 per unit of risk. If you would invest 18,267 in Vulcan Materials on August 25, 2024 and sell it today you would earn a total of 8,333 from holding Vulcan Materials or generate 45.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vulcan Materials vs. Compagnie Plastic Omnium
Performance |
| Timeline |
| Vulcan Materials |
| Compagnie Plastic Omnium |
Vulcan Materials and Compagnie Plastic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vulcan Materials and Compagnie Plastic
The main advantage of trading using opposite Vulcan Materials and Compagnie Plastic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vulcan Materials position performs unexpectedly, Compagnie Plastic 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 Compagnie Plastic will offset losses from the drop in Compagnie Plastic's long position.| Vulcan Materials vs. Compagnie de Saint Gobain | Vulcan Materials vs. HeidelbergCement AG | Vulcan Materials vs. Superior Plus Corp | Vulcan Materials vs. NMI Holdings |
| Compagnie Plastic vs. PT Astra International | Compagnie Plastic vs. Superior Plus Corp | Compagnie Plastic vs. NMI Holdings | Compagnie Plastic vs. Origin Agritech |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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