Correlation Between VULCAN MATERIALS and MOWI ASA

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

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

Diversification Opportunities for VULCAN MATERIALS and MOWI ASA

0.38

Correlation Coefficient

VULCAN MATERIALS  MOWI ASA

Weak diversification

The 3 months correlation between VULCAN and MOWI is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding VULCAN MATERIALS and MOWI ASA SPADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MOWI ASA SPADR 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 MOWI ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MOWI ASA SPADR has no effect on the direction of VULCAN MATERIALS i.e., VULCAN MATERIALS and MOWI ASA go up and down completely randomly.

Pair Corralation between VULCAN MATERIALS and MOWI ASA

Assuming the 90 days trading horizon VULCAN MATERIALS is expected to under-perform the MOWI ASA. But the stock apears to be less risky and, when comparing its historical volatility, VULCAN MATERIALS is 1.04 times less risky than MOWI ASA. The stock trades about -0.13 of its potential returns per unit of risk. The MOWI ASA SPADR is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,605  in MOWI ASA SPADR on December 20, 2024 and sell it today you would earn a total of  145.00  from holding MOWI ASA SPADR or generate 9.03% return on investment over 90 days.

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

VULCAN MATERIALS  vs.  MOWI ASA SPADR

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 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.

MOWI ASA SPADR

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MOWI ASA SPADR are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain fundamental indicators, MOWI ASA may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with VULCAN MATERIALS and MOWI ASA

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

The idea behind VULCAN MATERIALS and MOWI ASA SPADR 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.

Check out your portfolio center.

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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.