Correlation Between Vulcan Steel and Coles
Can any of the company-specific risk be diversified away by investing in both Vulcan Steel and Coles 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 Steel and Coles into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vulcan Steel and Coles Group, you can compare the effects of market volatilities on Vulcan Steel and Coles 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 Steel with a short position of Coles. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vulcan Steel and Coles.
Diversification Opportunities for Vulcan Steel and Coles
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Vulcan and Coles is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Vulcan Steel and Coles Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coles Group and Vulcan Steel 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 Steel are associated (or correlated) with Coles. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coles Group has no effect on the direction of Vulcan Steel i.e., Vulcan Steel and Coles go up and down completely randomly.
Pair Corralation between Vulcan Steel and Coles
Assuming the 90 days trading horizon Vulcan Steel is expected to under-perform the Coles. In addition to that, Vulcan Steel is 4.5 times more volatile than Coles Group. It trades about -0.04 of its total potential returns per unit of risk. Coles Group is currently generating about 0.11 per unit of volatility. If you would invest 1,793 in Coles Group on October 14, 2024 and sell it today you would earn a total of 94.00 from holding Coles Group or generate 5.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vulcan Steel vs. Coles Group
Performance |
| Timeline |
| Vulcan Steel |
| Coles Group |
Vulcan Steel and Coles Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vulcan Steel and Coles
The main advantage of trading using opposite Vulcan Steel and Coles positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vulcan Steel position performs unexpectedly, Coles 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 Coles will offset losses from the drop in Coles' long position.| Vulcan Steel vs. Land Homes Group | Vulcan Steel vs. Skycity Entertainment Group | Vulcan Steel vs. Bio Gene Technology | Vulcan Steel vs. Home Consortium |
| Coles vs. Macquarie Technology Group | Coles vs. Duketon Mining | Coles vs. Peel Mining | Coles vs. Zoom2u Technologies |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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