Correlation Between MusclePharm and Vulcan Materials

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

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

Diversification Opportunities for MusclePharm and Vulcan Materials

-0.43

Correlation Coefficient

MusclePharm  Vulcan Materials

Very good diversification

The 3 months correlation between MusclePharm and Vulcan is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding MusclePharm and Vulcan Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vulcan Materials and MusclePharm 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 MusclePharm 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 MusclePharm i.e., MusclePharm and Vulcan Materials go up and down completely randomly.

Pair Corralation between MusclePharm and Vulcan Materials

If you would invest  26,455  in Vulcan Materials on October 26, 2024 and sell it today you would earn a total of  1,313  from holding Vulcan Materials or generate 4.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	0.0%
Values	Daily Returns

MusclePharm  vs.  Vulcan Materials

MusclePharm

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MusclePharm has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, MusclePharm is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Vulcan Materials

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vulcan Materials are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak primary indicators, Vulcan Materials may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with MusclePharm and Vulcan Materials

The main advantage of trading using opposite MusclePharm and Vulcan Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MusclePharm 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 MusclePharm 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.