Correlation Between Vulcan Materials and CDN IMPERIAL
Can any of the company-specific risk be diversified away by investing in both Vulcan Materials and CDN IMPERIAL 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 CDN IMPERIAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vulcan Materials and CDN IMPERIAL BANK, you can compare the effects of market volatilities on Vulcan Materials and CDN IMPERIAL 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 CDN IMPERIAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vulcan Materials and CDN IMPERIAL.
Diversification Opportunities for Vulcan Materials and CDN IMPERIAL
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vulcan and CDN is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Vulcan Materials and CDN IMPERIAL BANK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CDN IMPERIAL BANK 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 CDN IMPERIAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CDN IMPERIAL BANK has no effect on the direction of Vulcan Materials i.e., Vulcan Materials and CDN IMPERIAL go up and down completely randomly.
Pair Corralation between Vulcan Materials and CDN IMPERIAL
Assuming the 90 days horizon Vulcan Materials is expected to generate 2.02 times more return on investment than CDN IMPERIAL. However, Vulcan Materials is 2.02 times more volatile than CDN IMPERIAL BANK. It trades about 0.12 of its potential returns per unit of risk. CDN IMPERIAL BANK is currently generating about 0.21 per unit of risk. If you would invest 21,959 in Vulcan Materials on September 24, 2024 and sell it today you would earn a total of 3,041 from holding Vulcan Materials or generate 13.85% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Vulcan Materials vs. CDN IMPERIAL BANK
Performance |
Timeline |
Vulcan Materials |
CDN IMPERIAL BANK |
Vulcan Materials and CDN IMPERIAL Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Vulcan Materials and CDN IMPERIAL
The main advantage of trading using opposite Vulcan Materials and CDN IMPERIAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vulcan Materials position performs unexpectedly, CDN IMPERIAL 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 CDN IMPERIAL will offset losses from the drop in CDN IMPERIAL's long position.Vulcan Materials vs. Regions Financial | Vulcan Materials vs. LANDSEA HOMES P | Vulcan Materials vs. QBE Insurance Group | Vulcan Materials vs. Webster Financial |
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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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