Correlation Between Vinci SA and Arcosa

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

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

Diversification Opportunities for Vinci SA and Arcosa

-0.56

Correlation Coefficient

Vinci SA  Arcosa

Excellent diversification

The 3 months correlation between Vinci and Arcosa is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Vinci SA ADR and Arcosa Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arcosa Inc and Vinci SA 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 Vinci SA ADR are associated (or correlated) with Arcosa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arcosa Inc has no effect on the direction of Vinci SA i.e., Vinci SA and Arcosa go up and down completely randomly.

Pair Corralation between Vinci SA and Arcosa

Assuming the 90 days horizon Vinci SA is expected to generate 24.37 times less return on investment than Arcosa. But when comparing it to its historical volatility, Vinci SA ADR is 1.57 times less risky than Arcosa. It trades about 0.0 of its potential returns per unit of risk. Arcosa Inc is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  5,464  in Arcosa Inc on October 11, 2024 and sell it today you would earn a total of  4,035  from holding Arcosa Inc or generate 73.85% return on investment over 90 days.

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

Vinci SA ADR  vs.  Arcosa Inc

Vinci SA ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vinci SA ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Arcosa Inc

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Vinci SA and Arcosa

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

The idea behind Vinci SA ADR and Arcosa Inc 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.