Correlation Between VULCAN MATERIALS and Fastenal
Can any of the company-specific risk be diversified away by investing in both VULCAN MATERIALS and Fastenal 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 Fastenal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VULCAN MATERIALS and Fastenal Company, you can compare the effects of market volatilities on VULCAN MATERIALS and Fastenal 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 Fastenal. Check out your portfolio center. Please also check ongoing floating volatility patterns of VULCAN MATERIALS and Fastenal.
Diversification Opportunities for VULCAN MATERIALS and Fastenal
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between VULCAN and Fastenal is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding VULCAN MATERIALS and Fastenal Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fastenal 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 Fastenal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fastenal has no effect on the direction of VULCAN MATERIALS i.e., VULCAN MATERIALS and Fastenal go up and down completely randomly.
Pair Corralation between VULCAN MATERIALS and Fastenal
Assuming the 90 days trading horizon VULCAN MATERIALS is expected to generate 0.61 times more return on investment than Fastenal. However, VULCAN MATERIALS is 1.65 times less risky than Fastenal. It trades about 0.21 of its potential returns per unit of risk. Fastenal Company is currently generating about 0.08 per unit of risk. If you would invest 24,800 in VULCAN MATERIALS on November 7, 2024 and sell it today you would earn a total of 1,400 from holding VULCAN MATERIALS or generate 5.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
VULCAN MATERIALS vs. Fastenal Company
Performance |
| Timeline |
| VULCAN MATERIALS |
| Fastenal |
VULCAN MATERIALS and Fastenal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VULCAN MATERIALS and Fastenal
The main advantage of trading using opposite VULCAN MATERIALS and Fastenal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VULCAN MATERIALS position performs unexpectedly, Fastenal 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 Fastenal will offset losses from the drop in Fastenal's long position.| VULCAN MATERIALS vs. PATTIES FOODS | VULCAN MATERIALS vs. Moneysupermarket Group PLC | VULCAN MATERIALS vs. Universal Display | VULCAN MATERIALS vs. United Natural Foods |
| Fastenal vs. RATIONAL Aktiengesellschaft | Fastenal vs. WW Grainger | Fastenal vs. Watsco Inc | Fastenal vs. WATSCO INC B |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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