Correlation Between VULCAN MATERIALS and SYLVANIA PLAT
Can any of the company-specific risk be diversified away by investing in both VULCAN MATERIALS and SYLVANIA PLAT 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 SYLVANIA PLAT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VULCAN MATERIALS and SYLVANIA PLAT DL, you can compare the effects of market volatilities on VULCAN MATERIALS and SYLVANIA PLAT 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 SYLVANIA PLAT. Check out your portfolio center. Please also check ongoing floating volatility patterns of VULCAN MATERIALS and SYLVANIA PLAT.
Diversification Opportunities for VULCAN MATERIALS and SYLVANIA PLAT
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between VULCAN and SYLVANIA is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding VULCAN MATERIALS and SYLVANIA PLAT DL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SYLVANIA PLAT DL 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 are associated (or correlated) with SYLVANIA PLAT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SYLVANIA PLAT DL has no effect on the direction of VULCAN MATERIALS i.e., VULCAN MATERIALS and SYLVANIA PLAT go up and down completely randomly.
Pair Corralation between VULCAN MATERIALS and SYLVANIA PLAT
Assuming the 90 days trading horizon VULCAN MATERIALS is expected to generate 0.59 times more return on investment than SYLVANIA PLAT. However, VULCAN MATERIALS is 1.69 times less risky than SYLVANIA PLAT. It trades about 0.13 of its potential returns per unit of risk. SYLVANIA PLAT DL is currently generating about -0.06 per unit of risk. If you would invest 21,560 in VULCAN MATERIALS on October 8, 2024 and sell it today you would earn a total of 3,240 from holding VULCAN MATERIALS or generate 15.03% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
VULCAN MATERIALS vs. SYLVANIA PLAT DL
Performance |
Timeline |
VULCAN MATERIALS |
SYLVANIA PLAT DL |
VULCAN MATERIALS and SYLVANIA PLAT Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with VULCAN MATERIALS and SYLVANIA PLAT
The main advantage of trading using opposite VULCAN MATERIALS and SYLVANIA PLAT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VULCAN MATERIALS position performs unexpectedly, SYLVANIA PLAT 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 SYLVANIA PLAT will offset losses from the drop in SYLVANIA PLAT's long position.VULCAN MATERIALS vs. Shin Etsu Chemical Co | ||
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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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