Correlation Between Panther Metals and Vulcan Materials

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

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

Diversification Opportunities for Panther Metals and Vulcan Materials

0.78

Correlation Coefficient

Panther Metals  Vulcan Materials

Poor diversification

The 3 months correlation between Panther and Vulcan is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Panther Metals PLC and Vulcan Materials Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vulcan Materials and Panther Metals 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 Panther Metals PLC 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 Panther Metals i.e., Panther Metals and Vulcan Materials go up and down completely randomly.

Pair Corralation between Panther Metals and Vulcan Materials

Assuming the 90 days trading horizon Panther Metals PLC is expected to generate 2.22 times more return on investment than Vulcan Materials. However, Panther Metals is 2.22 times more volatile than Vulcan Materials Co. It trades about -0.1 of its potential returns per unit of risk. Vulcan Materials Co is currently generating about -0.22 per unit of risk. If you would invest  9,500  in Panther Metals PLC on October 11, 2024 and sell it today you would lose (750.00) from holding Panther Metals PLC or give up 7.89% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Panther Metals PLC  vs.  Vulcan Materials Co

Panther Metals PLC

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Panther Metals PLC are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Panther Metals unveiled solid returns over the last few months and may actually be approaching a breakup point.

Vulcan Materials

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vulcan Materials Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Vulcan Materials is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Panther Metals and Vulcan Materials

The main advantage of trading using opposite Panther Metals and Vulcan Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Panther Metals 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 Panther Metals PLC and Vulcan Materials Co 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.