Correlation Between National Atomic and Vulcan Materials

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

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

Diversification Opportunities for National Atomic and Vulcan Materials

0.56

Correlation Coefficient

National Atomic  Vulcan Materials

Very weak diversification

The 3 months correlation between National and Vulcan is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding National Atomic Co and Vulcan Materials Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vulcan Materials and National Atomic 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 National Atomic Co 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 National Atomic i.e., National Atomic and Vulcan Materials go up and down completely randomly.

Pair Corralation between National Atomic and Vulcan Materials

Assuming the 90 days trading horizon National Atomic Co is expected to under-perform the Vulcan Materials. In addition to that, National Atomic is 1.22 times more volatile than Vulcan Materials Co. It trades about 0.0 of its total potential returns per unit of risk. Vulcan Materials Co is currently generating about 0.13 per unit of volatility. If you would invest  26,299  in Vulcan Materials Co on October 23, 2024 and sell it today you would earn a total of  861.00  from holding Vulcan Materials Co or generate 3.27% return on investment over 90 days.

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

National Atomic Co  vs.  Vulcan Materials Co

National Atomic

Risk-Adjusted Performance

0 of 100

Very Weak

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

Vulcan Materials

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vulcan Materials Co 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 National Atomic and Vulcan Materials

The main advantage of trading using opposite National Atomic and Vulcan Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Atomic 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 National Atomic Co and Vulcan Materials Co 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.