Correlation Between Vulcan Materials and FinecoBank SpA

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

Diversification Opportunities for Vulcan Materials and FinecoBank SpA

-0.09

Correlation Coefficient

Vulcan Materials  FinecoBank SpA

Good diversification

The 3 months correlation between Vulcan and FinecoBank is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Vulcan Materials Co and FinecoBank SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FinecoBank SpA 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 FinecoBank SpA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FinecoBank SpA has no effect on the direction of Vulcan Materials i.e., Vulcan Materials and FinecoBank SpA go up and down completely randomly.

Pair Corralation between Vulcan Materials and FinecoBank SpA

Assuming the 90 days trading horizon Vulcan Materials Co is expected to under-perform the FinecoBank SpA. In addition to that, Vulcan Materials is 1.7 times more volatile than FinecoBank SpA. It trades about -0.22 of its total potential returns per unit of risk. FinecoBank SpA is currently generating about 0.24 per unit of volatility. If you would invest  1,670  in FinecoBank SpA on October 11, 2024 and sell it today you would earn a total of  75.00  from holding FinecoBank SpA or generate 4.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Vulcan Materials Co  vs.  FinecoBank SpA

Vulcan Materials

Risk-Adjusted Performance

2 of 100

Insignificant

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

FinecoBank SpA

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FinecoBank SpA are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, FinecoBank SpA unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vulcan Materials and FinecoBank SpA

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

The idea behind Vulcan Materials Co and FinecoBank SpA 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.