Correlation Between Vulcan Materials and Nestlé SA
Can any of the company-specific risk be diversified away by investing in both Vulcan Materials and Nestlé SA 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 Nestlé SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vulcan Materials and Nestl SA, you can compare the effects of market volatilities on Vulcan Materials and Nestlé SA 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 Nestlé SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vulcan Materials and Nestlé SA.
Diversification Opportunities for Vulcan Materials and Nestlé SA
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Vulcan and Nestlé is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Vulcan Materials and Nestl SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nestlé SA 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 Nestlé SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nestlé SA has no effect on the direction of Vulcan Materials i.e., Vulcan Materials and Nestlé SA go up and down completely randomly.
Pair Corralation between Vulcan Materials and Nestlé SA
Assuming the 90 days horizon Vulcan Materials is expected to under-perform the Nestlé SA. In addition to that, Vulcan Materials is 1.14 times more volatile than Nestl SA. It trades about -0.33 of its total potential returns per unit of risk. Nestl SA is currently generating about -0.02 per unit of volatility. If you would invest 8,080 in Nestl SA on October 12, 2024 and sell it today you would lose (40.00) from holding Nestl SA or give up 0.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.44% |
| Values | Daily Returns |
Vulcan Materials vs. Nestl SA
Performance |
| Timeline |
| Vulcan Materials |
| Nestlé SA |
Vulcan Materials and Nestlé SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vulcan Materials and Nestlé SA
The main advantage of trading using opposite Vulcan Materials and Nestlé SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vulcan Materials position performs unexpectedly, Nestlé SA 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 Nestlé SA will offset losses from the drop in Nestlé SA's long position.| Vulcan Materials vs. CN MODERN DAIRY | Vulcan Materials vs. ANTA SPORTS PRODUCT | Vulcan Materials vs. ATRESMEDIA | Vulcan Materials vs. EBRO FOODS |
| Nestlé SA vs. Rayonier Advanced Materials | Nestlé SA vs. LG Display Co | Nestlé SA vs. EAGLE MATERIALS | Nestlé SA vs. Vulcan 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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