Correlation Between VULCAN MATERIALS and COPLAND ROAD

Can any of the company-specific risk be diversified away by investing in both VULCAN MATERIALS and COPLAND ROAD 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 COPLAND ROAD into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between VULCAN MATERIALS and COPLAND ROAD CAPITAL, you can compare the effects of market volatilities on VULCAN MATERIALS and COPLAND ROAD 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 COPLAND ROAD. Check out your portfolio center. Please also check ongoing floating volatility patterns of VULCAN MATERIALS and COPLAND ROAD.

Diversification Opportunities for VULCAN MATERIALS and COPLAND ROAD

-0.25

Correlation Coefficient

VULCAN MATERIALS  COPLAND ROAD

Very good diversification

The 3 months correlation between VULCAN and COPLAND is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding VULCAN MATERIALS and COPLAND ROAD CAPITAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COPLAND ROAD CAPITAL 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 COPLAND ROAD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COPLAND ROAD CAPITAL has no effect on the direction of VULCAN MATERIALS i.e., VULCAN MATERIALS and COPLAND ROAD go up and down completely randomly.

Pair Corralation between VULCAN MATERIALS and COPLAND ROAD

Assuming the 90 days trading horizon VULCAN MATERIALS is expected to generate 0.71 times more return on investment than COPLAND ROAD. However, VULCAN MATERIALS is 1.41 times less risky than COPLAND ROAD. It trades about 0.16 of its potential returns per unit of risk. COPLAND ROAD CAPITAL is currently generating about 0.05 per unit of risk. If you would invest  21,560  in VULCAN MATERIALS on September 15, 2024 and sell it today you would earn a total of  4,640  from holding VULCAN MATERIALS or generate 21.52% 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.  COPLAND ROAD CAPITAL

VULCAN MATERIALS

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in VULCAN MATERIALS are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, VULCAN MATERIALS unveiled solid returns over the last few months and may actually be approaching a breakup point.

COPLAND ROAD CAPITAL

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in COPLAND ROAD CAPITAL are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, COPLAND ROAD may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with VULCAN MATERIALS and COPLAND ROAD

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

The idea behind VULCAN MATERIALS and COPLAND ROAD CAPITAL 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.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.