Correlation Between VULCAN MATERIALS and Dassault Systèmes

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

By analyzing existing cross correlation between VULCAN MATERIALS and Dassault Systmes SE, you can compare the effects of market volatilities on VULCAN MATERIALS and Dassault Systèmes 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 Dassault Systèmes. Check out your portfolio center. Please also check ongoing floating volatility patterns of VULCAN MATERIALS and Dassault Systèmes.

Diversification Opportunities for VULCAN MATERIALS and Dassault Systèmes

-0.32

Correlation Coefficient

VULCAN MATERIALS  Dassault Systèmes

Very good diversification

The 3 months correlation between VULCAN and Dassault is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding VULCAN MATERIALS and Dassault Systmes SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dassault Systèmes 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 Dassault Systèmes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dassault Systèmes has no effect on the direction of VULCAN MATERIALS i.e., VULCAN MATERIALS and Dassault Systèmes go up and down completely randomly.

Pair Corralation between VULCAN MATERIALS and Dassault Systèmes

Assuming the 90 days trading horizon VULCAN MATERIALS is expected to under-perform the Dassault Systèmes. But the stock apears to be less risky and, when comparing its historical volatility, VULCAN MATERIALS is 1.07 times less risky than Dassault Systèmes. The stock trades about -0.13 of its potential returns per unit of risk. The Dassault Systmes SE is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  3,300  in Dassault Systmes SE on December 23, 2024 and sell it today you would earn a total of  560.00  from holding Dassault Systmes SE or generate 16.97% return on investment over 90 days.

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

VULCAN MATERIALS  vs.  Dassault Systmes SE

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. In spite of uncertain 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.

Dassault Systèmes

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dassault Systmes SE are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Dassault Systèmes reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with VULCAN MATERIALS and Dassault Systèmes

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

The idea behind VULCAN MATERIALS and Dassault Systmes SE 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.