Correlation Between Vulcan Materials and NHPBP

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

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

Diversification Opportunities for Vulcan Materials and NHPBP

-0.04

Correlation Coefficient

Vulcan Materials  NHPBP

Good diversification

The 3 months correlation between Vulcan and NHPBP is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Vulcan Materials and NHPBP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NHPBP 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 NHPBP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NHPBP has no effect on the direction of Vulcan Materials i.e., Vulcan Materials and NHPBP go up and down completely randomly.

Pair Corralation between Vulcan Materials and NHPBP

Considering the 90-day investment horizon Vulcan Materials is expected to generate 0.64 times more return on investment than NHPBP. However, Vulcan Materials is 1.55 times less risky than NHPBP. It trades about 0.06 of its potential returns per unit of risk. NHPBP is currently generating about 0.0 per unit of risk. If you would invest  17,611  in Vulcan Materials on October 11, 2024 and sell it today you would earn a total of  7,917  from holding Vulcan Materials or generate 44.95% 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.  NHPBP

Vulcan Materials

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vulcan Materials are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound primary indicators, Vulcan Materials is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

NHPBP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NHPBP has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest fragile performance, the Stock's fundamental drivers remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Vulcan Materials and NHPBP

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

The idea behind Vulcan Materials and NHPBP 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.