Correlation Between Vulcan Materials and Cembra Money

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

Diversification Opportunities for Vulcan Materials and Cembra Money

-0.21

Correlation Coefficient

Vulcan Materials  Cembra Money

Very good diversification

The 3 months correlation between Vulcan and Cembra is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Vulcan Materials Co and Cembra Money Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cembra Money 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 Co are associated (or correlated) with Cembra Money. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cembra Money Bank has no effect on the direction of Vulcan Materials i.e., Vulcan Materials and Cembra Money go up and down completely randomly.

Pair Corralation between Vulcan Materials and Cembra Money

Assuming the 90 days trading horizon Vulcan Materials is expected to generate 2.91 times less return on investment than Cembra Money. In addition to that, Vulcan Materials is 2.07 times more volatile than Cembra Money Bank. It trades about 0.12 of its total potential returns per unit of risk. Cembra Money Bank is currently generating about 0.7 per unit of volatility. If you would invest  8,155  in Cembra Money Bank on October 22, 2024 and sell it today you would earn a total of  730.00  from holding Cembra Money Bank or generate 8.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.74%
Values	Daily Returns

Vulcan Materials Co  vs.  Cembra Money Bank

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.

Cembra Money Bank

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cembra Money Bank are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Cembra Money may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Vulcan Materials and Cembra Money

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

The idea behind Vulcan Materials Co and Cembra Money Bank 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.