Correlation Between Vulcan Materials and HITACHI CONSTRMACHADR/2
Can any of the company-specific risk be diversified away by investing in both Vulcan Materials and HITACHI CONSTRMACHADR/2 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 HITACHI CONSTRMACHADR/2 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vulcan Materials and HITACHI STRMACHADR2, you can compare the effects of market volatilities on Vulcan Materials and HITACHI CONSTRMACHADR/2 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 HITACHI CONSTRMACHADR/2. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vulcan Materials and HITACHI CONSTRMACHADR/2.
Diversification Opportunities for Vulcan Materials and HITACHI CONSTRMACHADR/2
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Vulcan and HITACHI is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Vulcan Materials and HITACHI STRMACHADR2 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HITACHI CONSTRMACHADR/2 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 HITACHI CONSTRMACHADR/2. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HITACHI CONSTRMACHADR/2 has no effect on the direction of Vulcan Materials i.e., Vulcan Materials and HITACHI CONSTRMACHADR/2 go up and down completely randomly.
Pair Corralation between Vulcan Materials and HITACHI CONSTRMACHADR/2
Assuming the 90 days horizon Vulcan Materials is expected to generate 0.93 times more return on investment than HITACHI CONSTRMACHADR/2. However, Vulcan Materials is 1.08 times less risky than HITACHI CONSTRMACHADR/2. It trades about 0.08 of its potential returns per unit of risk. HITACHI STRMACHADR2 is currently generating about -0.04 per unit of risk. If you would invest 22,710 in Vulcan Materials on September 2, 2024 and sell it today you would earn a total of 4,290 from holding Vulcan Materials or generate 18.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vulcan Materials vs. HITACHI STRMACHADR2
Performance |
| Timeline |
| Vulcan Materials |
| HITACHI CONSTRMACHADR/2 |
Vulcan Materials and HITACHI CONSTRMACHADR/2 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vulcan Materials and HITACHI CONSTRMACHADR/2
The main advantage of trading using opposite Vulcan Materials and HITACHI CONSTRMACHADR/2 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vulcan Materials position performs unexpectedly, HITACHI CONSTRMACHADR/2 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 HITACHI CONSTRMACHADR/2 will offset losses from the drop in HITACHI CONSTRMACHADR/2's long position.| Vulcan Materials vs. CECO ENVIRONMENTAL | Vulcan Materials vs. BLUESCOPE STEEL | Vulcan Materials vs. RELIANCE STEEL AL | Vulcan Materials 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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