Correlation Between Enlight Renewable and Vulcan Materials

Can any of the company-specific risk be diversified away by investing in both Enlight Renewable 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 Enlight Renewable and Vulcan Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Enlight Renewable Energy and Vulcan Materials, you can compare the effects of market volatilities on Enlight Renewable 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 Enlight Renewable with a short position of Vulcan Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enlight Renewable and Vulcan Materials.

Diversification Opportunities for Enlight Renewable and Vulcan Materials

-0.07

Correlation Coefficient

Enlight Renewable  Vulcan Materials

Good diversification

The 3 months correlation between Enlight and Vulcan is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Enlight Renewable Energy and Vulcan Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vulcan Materials and Enlight Renewable 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 Enlight Renewable Energy 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 Enlight Renewable i.e., Enlight Renewable and Vulcan Materials go up and down completely randomly.

Pair Corralation between Enlight Renewable and Vulcan Materials

Given the investment horizon of 90 days Enlight Renewable Energy is expected to generate 35.6 times more return on investment than Vulcan Materials. However, Enlight Renewable is 35.6 times more volatile than Vulcan Materials. It trades about 0.06 of its potential returns per unit of risk. Vulcan Materials is currently generating about 0.06 per unit of risk. If you would invest  198.00  in Enlight Renewable Energy on October 11, 2024 and sell it today you would earn a total of  1,500  from holding Enlight Renewable Energy or generate 757.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Enlight Renewable Energy  vs.  Vulcan Materials

Enlight Renewable Energy

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Enlight Renewable Energy are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, Enlight Renewable may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Vulcan Materials

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vulcan Materials are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound primary indicators, Vulcan Materials is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Enlight Renewable and Vulcan Materials

The main advantage of trading using opposite Enlight Renewable and Vulcan Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enlight Renewable 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' long position.

The idea behind Enlight Renewable Energy 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.

Check out your portfolio center.

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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.