Correlation Between Vulcan Materials and Materialise

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

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

Diversification Opportunities for Vulcan Materials and Materialise

0.89

Correlation Coefficient

Vulcan Materials  Materialise

Very poor diversification

The 3 months correlation between Vulcan and Materialise is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Vulcan Materials and Materialise NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Materialise NV 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 Materialise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Materialise NV has no effect on the direction of Vulcan Materials i.e., Vulcan Materials and Materialise go up and down completely randomly.

Pair Corralation between Vulcan Materials and Materialise

Assuming the 90 days horizon Vulcan Materials is expected to generate 0.3 times more return on investment than Materialise. However, Vulcan Materials is 3.37 times less risky than Materialise. It trades about -0.14 of its potential returns per unit of risk. Materialise NV is currently generating about -0.08 per unit of risk. If you would invest  24,944  in Vulcan Materials on December 25, 2024 and sell it today you would lose (3,544) from holding Vulcan Materials or give up 14.21% of portfolio value over 90 days.

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

Vulcan Materials  vs.  Materialise NV

Vulcan Materials

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vulcan Materials has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Materialise NV

Risk-Adjusted Performance

Very Weak

Over the last 90 days Materialise NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Vulcan Materials and Materialise

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

The idea behind Vulcan Materials and Materialise NV 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.