Correlation Between VULCAN MATERIALS and Daimler Truck
Can any of the company-specific risk be diversified away by investing in both VULCAN MATERIALS and Daimler Truck 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 Daimler Truck into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VULCAN MATERIALS and Daimler Truck Holding, you can compare the effects of market volatilities on VULCAN MATERIALS and Daimler Truck 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 Daimler Truck. Check out your portfolio center. Please also check ongoing floating volatility patterns of VULCAN MATERIALS and Daimler Truck.
Diversification Opportunities for VULCAN MATERIALS and Daimler Truck
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between VULCAN and Daimler is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding VULCAN MATERIALS and Daimler Truck Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daimler Truck Holding 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 Daimler Truck. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daimler Truck Holding has no effect on the direction of VULCAN MATERIALS i.e., VULCAN MATERIALS and Daimler Truck go up and down completely randomly.
Pair Corralation between VULCAN MATERIALS and Daimler Truck
Assuming the 90 days trading horizon VULCAN MATERIALS is expected to under-perform the Daimler Truck. But the stock apears to be less risky and, when comparing its historical volatility, VULCAN MATERIALS is 1.47 times less risky than Daimler Truck. The stock trades about -0.06 of its potential returns per unit of risk. The Daimler Truck Holding is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 3,641 in Daimler Truck Holding on October 26, 2024 and sell it today you would earn a total of 325.00 from holding Daimler Truck Holding or generate 8.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
VULCAN MATERIALS vs. Daimler Truck Holding
Performance |
| Timeline |
| VULCAN MATERIALS |
| Daimler Truck Holding |
VULCAN MATERIALS and Daimler Truck Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VULCAN MATERIALS and Daimler Truck
The main advantage of trading using opposite VULCAN MATERIALS and Daimler Truck positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VULCAN MATERIALS position performs unexpectedly, Daimler Truck 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 Daimler Truck will offset losses from the drop in Daimler Truck's long position.| VULCAN MATERIALS vs. Apple Inc | VULCAN MATERIALS vs. Apple Inc | VULCAN MATERIALS vs. Apple Inc | VULCAN MATERIALS vs. Apple Inc |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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