Correlation Between Vulcan Materials and Scandinavian Tobacco
Can any of the company-specific risk be diversified away by investing in both Vulcan Materials and Scandinavian Tobacco 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 Scandinavian Tobacco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vulcan Materials Co and Scandinavian Tobacco Group, you can compare the effects of market volatilities on Vulcan Materials and Scandinavian Tobacco 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 Scandinavian Tobacco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vulcan Materials and Scandinavian Tobacco.
Diversification Opportunities for Vulcan Materials and Scandinavian Tobacco
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Vulcan and Scandinavian is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Vulcan Materials Co and Scandinavian Tobacco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandinavian Tobacco 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 Co are associated (or correlated) with Scandinavian Tobacco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scandinavian Tobacco has no effect on the direction of Vulcan Materials i.e., Vulcan Materials and Scandinavian Tobacco go up and down completely randomly.
Pair Corralation between Vulcan Materials and Scandinavian Tobacco
Assuming the 90 days trading horizon Vulcan Materials Co is expected to generate 1.42 times more return on investment than Scandinavian Tobacco. However, Vulcan Materials is 1.42 times more volatile than Scandinavian Tobacco Group. It trades about 0.05 of its potential returns per unit of risk. Scandinavian Tobacco Group is currently generating about -0.11 per unit of risk. If you would invest 25,003 in Vulcan Materials Co on September 25, 2024 and sell it today you would earn a total of 1,296 from holding Vulcan Materials Co or generate 5.18% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Vulcan Materials Co vs. Scandinavian Tobacco Group
Performance |
Timeline |
Vulcan Materials |
Scandinavian Tobacco |
Vulcan Materials and Scandinavian Tobacco Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Vulcan Materials and Scandinavian Tobacco
The main advantage of trading using opposite Vulcan Materials and Scandinavian Tobacco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vulcan Materials position performs unexpectedly, Scandinavian Tobacco 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 Scandinavian Tobacco will offset losses from the drop in Scandinavian Tobacco's long position.Vulcan Materials vs. Austevoll Seafood ASA | Vulcan Materials vs. Symphony Environmental Technologies | Vulcan Materials vs. Celebrus Technologies plc | Vulcan Materials vs. Roebuck Food Group |
Scandinavian Tobacco vs. Uniper SE | Scandinavian Tobacco vs. Mulberry Group PLC | Scandinavian Tobacco vs. London Security Plc | Scandinavian Tobacco vs. Triad Group PLC |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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