Correlation Between Vulcan Materials and KKR Co
Can any of the company-specific risk be diversified away by investing in both Vulcan Materials and KKR Co 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 KKR Co into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vulcan Materials and KKR Co LP, you can compare the effects of market volatilities on Vulcan Materials and KKR Co 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 KKR Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vulcan Materials and KKR Co.
Diversification Opportunities for Vulcan Materials and KKR Co
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vulcan and KKR is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Vulcan Materials and KKR Co LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KKR Co LP 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 KKR Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KKR Co LP has no effect on the direction of Vulcan Materials i.e., Vulcan Materials and KKR Co go up and down completely randomly.
Pair Corralation between Vulcan Materials and KKR Co
Assuming the 90 days horizon Vulcan Materials is expected to under-perform the KKR Co. But the stock apears to be less risky and, when comparing its historical volatility, Vulcan Materials is 1.09 times less risky than KKR Co. The stock trades about -0.15 of its potential returns per unit of risk. The KKR Co LP is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 14,446 in KKR Co LP on September 13, 2024 and sell it today you would earn a total of 22.00 from holding KKR Co LP or generate 0.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vulcan Materials vs. KKR Co LP
Performance |
| Timeline |
| Vulcan Materials |
| KKR Co LP |
Vulcan Materials and KKR Co Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vulcan Materials and KKR Co
The main advantage of trading using opposite Vulcan Materials and KKR Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vulcan Materials position performs unexpectedly, KKR Co 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 KKR Co will offset losses from the drop in KKR Co's long position.| Vulcan Materials vs. Heidelberg Materials AG | Vulcan Materials vs. Superior Plus Corp | Vulcan Materials vs. NMI Holdings | Vulcan Materials vs. SIVERS SEMICONDUCTORS AB |
| KKR Co vs. EVS Broadcast Equipment | KKR Co vs. Goosehead Insurance | KKR Co vs. COPLAND ROAD CAPITAL | KKR Co vs. INSURANCE AUST GRP |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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