Correlation Between Vulcan Materials and MT Bank

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

Diversification Opportunities for Vulcan Materials and MT Bank

0.69

Correlation Coefficient

Vulcan Materials  MT Bank

Poor diversification

The 3 months correlation between Vulcan and 0JW2 is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Vulcan Materials Co and MT Bank Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MT Bank Corp 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 MT Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MT Bank Corp has no effect on the direction of Vulcan Materials i.e., Vulcan Materials and MT Bank go up and down completely randomly.

Pair Corralation between Vulcan Materials and MT Bank

Assuming the 90 days trading horizon Vulcan Materials Co is expected to generate 0.98 times more return on investment than MT Bank. However, Vulcan Materials Co is 1.02 times less risky than MT Bank. It trades about 0.06 of its potential returns per unit of risk. MT Bank Corp is currently generating about 0.03 per unit of risk. If you would invest  25,780  in Vulcan Materials Co on October 25, 2024 and sell it today you would earn a total of  1,647  from holding Vulcan Materials Co or generate 6.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	93.55%
Values	Daily Returns

Vulcan Materials Co  vs.  MT Bank Corp

Vulcan Materials

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vulcan Materials Co are ranked lower than 4 (%) 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 February 2025.

MT Bank Corp

Risk-Adjusted Performance

2 of 100

Weak

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

Pair Trading with Vulcan Materials and MT Bank

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

The idea behind Vulcan Materials Co and MT Bank Corp 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.