Correlation Between Vulcan Steel and Woolworths
Can any of the company-specific risk be diversified away by investing in both Vulcan Steel and Woolworths 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 Woolworths into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vulcan Steel and Woolworths, you can compare the effects of market volatilities on Vulcan Steel and Woolworths 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 Woolworths. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vulcan Steel and Woolworths.
Diversification Opportunities for Vulcan Steel and Woolworths
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Vulcan and Woolworths is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Vulcan Steel and Woolworths in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woolworths 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 Woolworths. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Woolworths has no effect on the direction of Vulcan Steel i.e., Vulcan Steel and Woolworths go up and down completely randomly.
Pair Corralation between Vulcan Steel and Woolworths
Assuming the 90 days trading horizon Vulcan Steel is expected to generate 5.23 times more return on investment than Woolworths. However, Vulcan Steel is 5.23 times more volatile than Woolworths. It trades about 0.11 of its potential returns per unit of risk. Woolworths is currently generating about -0.13 per unit of risk. If you would invest 685.00 in Vulcan Steel on October 16, 2024 and sell it today you would earn a total of 43.00 from holding Vulcan Steel or generate 6.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vulcan Steel vs. Woolworths
Performance |
| Timeline |
| Vulcan Steel |
| Woolworths |
Vulcan Steel and Woolworths Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vulcan Steel and Woolworths
The main advantage of trading using opposite Vulcan Steel and Woolworths positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vulcan Steel position performs unexpectedly, Woolworths 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 Woolworths will offset losses from the drop in Woolworths' long position.| Vulcan Steel vs. Maggie Beer Holdings | Vulcan Steel vs. Regal Funds Management | Vulcan Steel vs. Queste Communications | Vulcan Steel vs. Hotel Property Investments |
| Woolworths vs. Sky Metals | Woolworths vs. MetalsGrove Mining | Woolworths vs. Perseus Mining | Woolworths vs. Black Rock Mining |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
Other Complementary Tools
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments |