Correlation Between Vulcan Materials and LENSAR

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

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

Diversification Opportunities for Vulcan Materials and LENSAR

0.15

Correlation Coefficient

Vulcan Materials  LENSAR

Average diversification

The 3 months correlation between Vulcan and LENSAR is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Vulcan Materials and LENSAR Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LENSAR Inc 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 LENSAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LENSAR Inc has no effect on the direction of Vulcan Materials i.e., Vulcan Materials and LENSAR go up and down completely randomly.

Pair Corralation between Vulcan Materials and LENSAR

Considering the 90-day investment horizon Vulcan Materials is expected to generate 7.53 times less return on investment than LENSAR. But when comparing it to its historical volatility, Vulcan Materials is 2.62 times less risky than LENSAR. It trades about 0.06 of its potential returns per unit of risk. LENSAR Inc is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  538.00  in LENSAR Inc on October 24, 2024 and sell it today you would earn a total of  279.00  from holding LENSAR Inc or generate 51.86% return on investment over 90 days.

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

Vulcan Materials  vs.  LENSAR Inc

Vulcan Materials

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vulcan Materials are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent primary indicators, Vulcan Materials may actually be approaching a critical reversion point that can send shares even higher in February 2025.

LENSAR Inc

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in LENSAR Inc are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, LENSAR reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vulcan Materials and LENSAR

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

The idea behind Vulcan Materials and LENSAR 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.