Correlation Between VULCAN MATERIALS and SYLVANIA PLAT

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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

VULCANSYLVANIADiversified AwayVULCANSYLVANIADiversified Away100%
-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 Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

VULCAN MATERIALS  vs.  SYLVANIA PLAT DL

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -1001020
JavaScript chart by amCharts 3.21.15VMC 31L
       Timeline  
VULCAN MATERIALS 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in VULCAN MATERIALS are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, VULCAN MATERIALS unveiled solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan220230240250260270
SYLVANIA PLAT DL 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days SYLVANIA PLAT DL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan0.460.480.50.520.540.560.580.60.62

VULCAN MATERIALS and SYLVANIA PLAT Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-5.98-4.48-2.98-1.48-0.0251.533.14.686.267.84 0.020.040.060.080.10
JavaScript chart by amCharts 3.21.15VMC 31L
       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.
The idea behind VULCAN MATERIALS and SYLVANIA PLAT DL 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.

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