Correlation Between Vulcan Materials and Futura Medical

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

Diversification Opportunities for Vulcan Materials and Futura Medical

0.44

Correlation Coefficient

Vulcan Materials  Futura Medical

Very weak diversification

The 3 months correlation between Vulcan and Futura is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Vulcan Materials Co and Futura Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Futura Medical 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 Futura Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Futura Medical has no effect on the direction of Vulcan Materials i.e., Vulcan Materials and Futura Medical go up and down completely randomly.

Pair Corralation between Vulcan Materials and Futura Medical

Assuming the 90 days trading horizon Vulcan Materials Co is expected to under-perform the Futura Medical. In addition to that, Vulcan Materials is 1.9 times more volatile than Futura Medical. It trades about -0.3 of its total potential returns per unit of risk. Futura Medical is currently generating about -0.43 per unit of volatility. If you would invest  3,400  in Futura Medical on October 10, 2024 and sell it today you would lose (250.00) from holding Futura Medical or give up 7.35% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Vulcan Materials Co  vs.  Futura Medical

Vulcan Materials

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vulcan Materials Co are ranked lower than 3 (%) 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.

Futura Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Futura Medical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Futura Medical is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Vulcan Materials and Futura Medical

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

The idea behind Vulcan Materials Co and Futura Medical 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.