Correlation Between Vulcan Materials and DXC Technology

Can any of the company-specific risk be diversified away by investing in both Vulcan Materials and DXC Technology 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 DXC Technology 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 DXC Technology Co, you can compare the effects of market volatilities on Vulcan Materials and DXC Technology 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 DXC Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vulcan Materials and DXC Technology.

Diversification Opportunities for Vulcan Materials and DXC Technology

0.74

Correlation Coefficient

Vulcan Materials  DXC Technology

Poor diversification

The 3 months correlation between Vulcan and DXC is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Vulcan Materials Co and DXC Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DXC Technology 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 DXC Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DXC Technology has no effect on the direction of Vulcan Materials i.e., Vulcan Materials and DXC Technology go up and down completely randomly.

Pair Corralation between Vulcan Materials and DXC Technology

Assuming the 90 days trading horizon Vulcan Materials Co is expected to under-perform the DXC Technology. But the stock apears to be less risky and, when comparing its historical volatility, Vulcan Materials Co is 2.05 times less risky than DXC Technology. The stock trades about 0.0 of its potential returns per unit of risk. The DXC Technology Co is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  1,921  in DXC Technology Co on September 20, 2024 and sell it today you would earn a total of  233.00  from holding DXC Technology Co or generate 12.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Vulcan Materials Co  vs.  DXC Technology Co

Vulcan Materials

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vulcan Materials Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Vulcan Materials may actually be approaching a critical reversion point that can send shares even higher in January 2025.

DXC Technology

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in DXC Technology Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, DXC Technology is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Vulcan Materials and DXC Technology

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

The idea behind Vulcan Materials Co and DXC Technology Co 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.