Correlation Between Envela Corp and VULCAN MATERIALS

Can any of the company-specific risk be diversified away by investing in both Envela Corp and VULCAN MATERIALS 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 Envela Corp and VULCAN MATERIALS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Envela Corp and VULCAN MATERIALS, you can compare the effects of market volatilities on Envela Corp and VULCAN MATERIALS 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 Envela Corp with a short position of VULCAN MATERIALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Envela Corp and VULCAN MATERIALS.

Diversification Opportunities for Envela Corp and VULCAN MATERIALS

0.34

Correlation Coefficient

Envela Corp  VULCAN MATERIALS

Weak diversification

The 3 months correlation between Envela and VULCAN is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Envela Corp and VULCAN MATERIALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VULCAN MATERIALS and Envela Corp 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 Envela Corp are associated (or correlated) with VULCAN MATERIALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VULCAN MATERIALS has no effect on the direction of Envela Corp i.e., Envela Corp and VULCAN MATERIALS go up and down completely randomly.

Pair Corralation between Envela Corp and VULCAN MATERIALS

Assuming the 90 days trading horizon Envela Corp is expected to generate 2.19 times more return on investment than VULCAN MATERIALS. However, Envela Corp is 2.19 times more volatile than VULCAN MATERIALS. It trades about 0.45 of its potential returns per unit of risk. VULCAN MATERIALS is currently generating about -0.32 per unit of risk. If you would invest  630.00  in Envela Corp on October 11, 2024 and sell it today you would earn a total of  40.00  from holding Envela Corp or generate 6.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	29.41%
Values	Daily Returns

Envela Corp  vs.  VULCAN MATERIALS

Envela Corp

Risk-Adjusted Performance

0 of 100

Strong

Over the last 90 days Envela Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather unsteady basic indicators, Envela Corp exhibited solid returns over the last few months and may actually be approaching a breakup point.

VULCAN MATERIALS

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in VULCAN MATERIALS are ranked lower than 5 (%) 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.

Pair Trading with Envela Corp and VULCAN MATERIALS

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

The idea behind Envela Corp and VULCAN MATERIALS 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.