Correlation Between VULCAN MATERIALS and United Internet
Can any of the company-specific risk be diversified away by investing in both VULCAN MATERIALS and United Internet 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 United Internet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VULCAN MATERIALS and United Internet AG, you can compare the effects of market volatilities on VULCAN MATERIALS and United Internet 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 United Internet. Check out your portfolio center. Please also check ongoing floating volatility patterns of VULCAN MATERIALS and United Internet.
Diversification Opportunities for VULCAN MATERIALS and United Internet
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between VULCAN and United is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding VULCAN MATERIALS and United Internet AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Internet 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 United Internet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Internet AG has no effect on the direction of VULCAN MATERIALS i.e., VULCAN MATERIALS and United Internet go up and down completely randomly.
Pair Corralation between VULCAN MATERIALS and United Internet
Assuming the 90 days trading horizon VULCAN MATERIALS is expected to generate 0.67 times more return on investment than United Internet. However, VULCAN MATERIALS is 1.5 times less risky than United Internet. It trades about 0.21 of its potential returns per unit of risk. United Internet AG is currently generating about -0.24 per unit of risk. If you would invest 24,600 in VULCAN MATERIALS on September 5, 2024 and sell it today you would earn a total of 2,600 from holding VULCAN MATERIALS or generate 10.57% 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. United Internet AG
Performance |
| Timeline |
| VULCAN MATERIALS |
| United Internet AG |
VULCAN MATERIALS and United Internet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VULCAN MATERIALS and United Internet
The main advantage of trading using opposite VULCAN MATERIALS and United Internet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VULCAN MATERIALS position performs unexpectedly, United Internet 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 United Internet will offset losses from the drop in United Internet's long position.| VULCAN MATERIALS vs. Apple Inc | VULCAN MATERIALS vs. Apple Inc | VULCAN MATERIALS vs. Apple Inc | VULCAN MATERIALS vs. Apple Inc |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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