Correlation Between Vulcan Materials and Yokohama Rubber
Can any of the company-specific risk be diversified away by investing in both Vulcan Materials and Yokohama Rubber 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 Yokohama Rubber into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vulcan Materials and The Yokohama Rubber, you can compare the effects of market volatilities on Vulcan Materials and Yokohama Rubber 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 Yokohama Rubber. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vulcan Materials and Yokohama Rubber.
Diversification Opportunities for Vulcan Materials and Yokohama Rubber
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Vulcan and Yokohama is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Vulcan Materials and The Yokohama Rubber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yokohama Rubber 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 Yokohama Rubber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yokohama Rubber has no effect on the direction of Vulcan Materials i.e., Vulcan Materials and Yokohama Rubber go up and down completely randomly.
Pair Corralation between Vulcan Materials and Yokohama Rubber
Assuming the 90 days horizon Vulcan Materials is expected to generate 0.8 times more return on investment than Yokohama Rubber. However, Vulcan Materials is 1.25 times less risky than Yokohama Rubber. It trades about 0.09 of its potential returns per unit of risk. The Yokohama Rubber is currently generating about 0.03 per unit of risk. If you would invest 18,267 in Vulcan Materials on August 25, 2024 and sell it today you would earn a total of 8,333 from holding Vulcan Materials or generate 45.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.64% |
| Values | Daily Returns |
Vulcan Materials vs. The Yokohama Rubber
Performance |
| Timeline |
| Vulcan Materials |
| Yokohama Rubber |
Vulcan Materials and Yokohama Rubber Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vulcan Materials and Yokohama Rubber
The main advantage of trading using opposite Vulcan Materials and Yokohama Rubber positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vulcan Materials position performs unexpectedly, Yokohama Rubber 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 Yokohama Rubber will offset losses from the drop in Yokohama Rubber's long position.| Vulcan Materials vs. Compagnie de Saint Gobain | Vulcan Materials vs. HeidelbergCement AG | Vulcan Materials vs. Superior Plus Corp | Vulcan Materials vs. NMI Holdings |
| Yokohama Rubber vs. AOYAMA TRADING | Yokohama Rubber vs. SLR Investment Corp | Yokohama Rubber vs. Chuangs China Investments | Yokohama Rubber vs. NAKED WINES PLC |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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