Correlation Between Vulcan Materials and LION ONE
Can any of the company-specific risk be diversified away by investing in both Vulcan Materials and LION ONE 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 LION ONE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vulcan Materials and LION ONE METALS, you can compare the effects of market volatilities on Vulcan Materials and LION ONE 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 LION ONE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vulcan Materials and LION ONE.
Diversification Opportunities for Vulcan Materials and LION ONE
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Vulcan and LION is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Vulcan Materials and LION ONE METALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LION ONE METALS 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 LION ONE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LION ONE METALS has no effect on the direction of Vulcan Materials i.e., Vulcan Materials and LION ONE go up and down completely randomly.
Pair Corralation between Vulcan Materials and LION ONE
Assuming the 90 days horizon Vulcan Materials is expected to generate 0.27 times more return on investment than LION ONE. However, Vulcan Materials is 3.7 times less risky than LION ONE. It trades about -0.08 of its potential returns per unit of risk. LION ONE METALS is currently generating about -0.15 per unit of risk. If you would invest 27,000 in Vulcan Materials on September 13, 2024 and sell it today you would lose (600.00) from holding Vulcan Materials or give up 2.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Vulcan Materials vs. LION ONE METALS
Performance |
| Timeline |
| Vulcan Materials |
| LION ONE METALS |
Vulcan Materials and LION ONE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vulcan Materials and LION ONE
The main advantage of trading using opposite Vulcan Materials and LION ONE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vulcan Materials position performs unexpectedly, LION ONE 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 LION ONE will offset losses from the drop in LION ONE'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 |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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