Correlation Between Vulcan Materials and RWE AG
Can any of the company-specific risk be diversified away by investing in both Vulcan Materials and RWE AG 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 RWE AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vulcan Materials and RWE AG, you can compare the effects of market volatilities on Vulcan Materials and RWE AG 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 RWE AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vulcan Materials and RWE AG.
Diversification Opportunities for Vulcan Materials and RWE AG
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Vulcan and RWE is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Vulcan Materials and RWE AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RWE AG 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 RWE AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RWE AG has no effect on the direction of Vulcan Materials i.e., Vulcan Materials and RWE AG go up and down completely randomly.
Pair Corralation between Vulcan Materials and RWE AG
Assuming the 90 days horizon Vulcan Materials is expected to generate 1.2 times more return on investment than RWE AG. However, Vulcan Materials is 1.2 times more volatile than RWE AG. It trades about 0.19 of its potential returns per unit of risk. RWE AG is currently generating about 0.13 per unit of risk. If you would invest 24,600 in Vulcan Materials on September 3, 2024 and sell it today you would earn a total of 2,400 from holding Vulcan Materials or generate 9.76% 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. RWE AG
Performance |
| Timeline |
| Vulcan Materials |
| RWE AG |
Vulcan Materials and RWE AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vulcan Materials and RWE AG
The main advantage of trading using opposite Vulcan Materials and RWE AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vulcan Materials position performs unexpectedly, RWE AG 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 RWE AG will offset losses from the drop in RWE AG's long position.| Vulcan Materials vs. Chiba Bank | Vulcan Materials vs. ANTA SPORTS PRODUCT | Vulcan Materials vs. Fukuyama Transporting Co | Vulcan Materials vs. Tradegate AG Wertpapierhandelsbank |
| RWE AG vs. Warner Music Group | RWE AG vs. CVS Health | RWE AG vs. TITANIUM TRANSPORTGROUP | RWE AG vs. GEAR4MUSIC LS 10 |
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.
Other Complementary Tools
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm |