Correlation Between Vulcan Materials and SVB Financial

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

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

Diversification Opportunities for Vulcan Materials and SVB Financial

0.0

Correlation Coefficient

Vulcan Materials  SVB Financial

Pay attention - limited upside

The 3 months correlation between Vulcan and SVB is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Vulcan Materials and SVB Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SVB Financial Group 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 are associated (or correlated) with SVB Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SVB Financial Group has no effect on the direction of Vulcan Materials i.e., Vulcan Materials and SVB Financial go up and down completely randomly.

Pair Corralation between Vulcan Materials and SVB Financial

Assuming the 90 days trading horizon Vulcan Materials is expected to generate 0.68 times more return on investment than SVB Financial. However, Vulcan Materials is 1.46 times less risky than SVB Financial. It trades about 0.07 of its potential returns per unit of risk. SVB Financial Group is currently generating about -0.07 per unit of risk. If you would invest  1,496  in Vulcan Materials on October 23, 2024 and sell it today you would earn a total of  1,045  from holding Vulcan Materials or generate 69.85% return on investment over 90 days.

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

Vulcan Materials  vs.  SVB Financial Group

Vulcan Materials

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vulcan Materials are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong primary indicators, Vulcan Materials is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

SVB Financial Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SVB Financial Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward indicators, SVB Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Vulcan Materials and SVB Financial

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

The idea behind Vulcan Materials and SVB Financial Group 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.