Correlation Between Vulcan Materials and 26442UAA2

Can any of the company-specific risk be diversified away by investing in both Vulcan Materials and 26442UAA2 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 26442UAA2 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Vulcan Materials and DUKE ENERGY PROGRESS, you can compare the effects of market volatilities on Vulcan Materials and 26442UAA2 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 26442UAA2. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vulcan Materials and 26442UAA2.

Diversification Opportunities for Vulcan Materials and 26442UAA2

0.17

Correlation Coefficient

Vulcan Materials  26442UAA2

Average diversification

The 3 months correlation between Vulcan and 26442UAA2 is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Vulcan Materials and DUKE ENERGY PROGRESS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DUKE ENERGY PROGRESS 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 26442UAA2. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DUKE ENERGY PROGRESS has no effect on the direction of Vulcan Materials i.e., Vulcan Materials and 26442UAA2 go up and down completely randomly.

Pair Corralation between Vulcan Materials and 26442UAA2

Considering the 90-day investment horizon Vulcan Materials is expected to under-perform the 26442UAA2. In addition to that, Vulcan Materials is 3.85 times more volatile than DUKE ENERGY PROGRESS. It trades about -0.08 of its total potential returns per unit of risk. DUKE ENERGY PROGRESS is currently generating about 0.0 per unit of volatility. If you would invest  9,907  in DUKE ENERGY PROGRESS on December 24, 2024 and sell it today you would lose (6.00) from holding DUKE ENERGY PROGRESS or give up 0.06% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	80.33%
Values	Daily Returns

Vulcan Materials  vs.  DUKE ENERGY PROGRESS

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 latest weak performance, the Stock's primary indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

DUKE ENERGY PROGRESS

Risk-Adjusted Performance

Very Weak

Over the last 90 days DUKE ENERGY PROGRESS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 26442UAA2 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Vulcan Materials and 26442UAA2

The main advantage of trading using opposite Vulcan Materials and 26442UAA2 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vulcan Materials position performs unexpectedly, 26442UAA2 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 26442UAA2 will offset losses from the drop in 26442UAA2's long position.

The idea behind Vulcan Materials and DUKE ENERGY PROGRESS 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.