Correlation Between MAGNUM MINING and Vulcan Materials

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

By analyzing existing cross correlation between MAGNUM MINING EXP and Vulcan Materials, you can compare the effects of market volatilities on MAGNUM MINING and Vulcan Materials 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 MAGNUM MINING with a short position of Vulcan Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of MAGNUM MINING and Vulcan Materials.

Diversification Opportunities for MAGNUM MINING and Vulcan Materials

0.0

Correlation Coefficient

MAGNUM MINING  Vulcan Materials

Pay attention - limited upside

The 3 months correlation between MAGNUM and Vulcan is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding MAGNUM MINING EXP and Vulcan Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vulcan Materials and MAGNUM MINING 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 MAGNUM MINING EXP are associated (or correlated) with Vulcan Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vulcan Materials has no effect on the direction of MAGNUM MINING i.e., MAGNUM MINING and Vulcan Materials go up and down completely randomly.

Pair Corralation between MAGNUM MINING and Vulcan Materials

If you would invest  23,357  in Vulcan Materials on October 22, 2024 and sell it today you would earn a total of  2,843  from holding Vulcan Materials or generate 12.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

MAGNUM MINING EXP  vs.  Vulcan Materials

MAGNUM MINING EXP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MAGNUM MINING EXP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, MAGNUM MINING is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Vulcan Materials

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vulcan Materials are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Vulcan Materials reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MAGNUM MINING and Vulcan Materials

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

The idea behind MAGNUM MINING EXP and Vulcan Materials 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.