Correlation Between Vulcan Materials and SoftBrands

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

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

Diversification Opportunities for Vulcan Materials and SoftBrands

0.0

Correlation Coefficient

Vulcan Materials  SoftBrands

Pay attention - limited upside

The 3 months correlation between Vulcan and SoftBrands is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Vulcan Materials and SoftBrands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SoftBrands 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 SoftBrands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SoftBrands has no effect on the direction of Vulcan Materials i.e., Vulcan Materials and SoftBrands go up and down completely randomly.

Pair Corralation between Vulcan Materials and SoftBrands

If you would invest  25,329  in Vulcan Materials on October 22, 2024 and sell it today you would earn a total of  1,681  from holding Vulcan Materials or generate 6.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.61%
Values	Daily Returns

Vulcan Materials  vs.  SoftBrands

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 weak primary indicators, Vulcan Materials may actually be approaching a critical reversion point that can send shares even higher in February 2025.

SoftBrands

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SoftBrands has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental drivers, SoftBrands is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Vulcan Materials and SoftBrands

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

The idea behind Vulcan Materials and SoftBrands 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.