Correlation Between Vulcan Materials and Target Healthcare

Can any of the company-specific risk be diversified away by investing in both Vulcan Materials and Target Healthcare 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 Target Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Vulcan Materials Co and Target Healthcare REIT, you can compare the effects of market volatilities on Vulcan Materials and Target Healthcare 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 Target Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vulcan Materials and Target Healthcare.

Diversification Opportunities for Vulcan Materials and Target Healthcare

-0.6

Correlation Coefficient

Vulcan Materials  Target Healthcare

Excellent diversification

The 3 months correlation between Vulcan and Target is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Vulcan Materials Co and Target Healthcare REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Target Healthcare REIT 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 Co are associated (or correlated) with Target Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Target Healthcare REIT has no effect on the direction of Vulcan Materials i.e., Vulcan Materials and Target Healthcare go up and down completely randomly.

Pair Corralation between Vulcan Materials and Target Healthcare

Assuming the 90 days trading horizon Vulcan Materials Co is expected to under-perform the Target Healthcare. In addition to that, Vulcan Materials is 1.19 times more volatile than Target Healthcare REIT. It trades about -0.08 of its total potential returns per unit of risk. Target Healthcare REIT is currently generating about 0.11 per unit of volatility. If you would invest  8,390  in Target Healthcare REIT on December 30, 2024 and sell it today you would earn a total of  890.00  from holding Target Healthcare REIT or generate 10.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Vulcan Materials Co  vs.  Target Healthcare REIT

Vulcan Materials

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vulcan Materials Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Target Healthcare REIT

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Target Healthcare REIT are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Target Healthcare may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Vulcan Materials and Target Healthcare

The main advantage of trading using opposite Vulcan Materials and Target Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vulcan Materials position performs unexpectedly, Target Healthcare 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 Target Healthcare will offset losses from the drop in Target Healthcare's long position.

The idea behind Vulcan Materials Co and Target Healthcare REIT pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.