Correlation Between Vulcan Materials and 654106AH6

Can any of the company-specific risk be diversified away by investing in both Vulcan Materials and 654106AH6 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 654106AH6 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Vulcan Materials and NIKE INC, you can compare the effects of market volatilities on Vulcan Materials and 654106AH6 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 654106AH6. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vulcan Materials and 654106AH6.

Diversification Opportunities for Vulcan Materials and 654106AH6

0.46

Correlation Coefficient

Vulcan Materials  654106AH6

Very weak diversification

The 3 months correlation between Vulcan and 654106AH6 is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Vulcan Materials and NIKE INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 654106AH6 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 654106AH6. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 654106AH6 has no effect on the direction of Vulcan Materials i.e., Vulcan Materials and 654106AH6 go up and down completely randomly.

Pair Corralation between Vulcan Materials and 654106AH6

Considering the 90-day investment horizon Vulcan Materials is expected to under-perform the 654106AH6. In addition to that, Vulcan Materials is 10.8 times more volatile than NIKE INC. It trades about -0.08 of its total potential returns per unit of risk. NIKE INC is currently generating about -0.07 per unit of volatility. If you would invest  9,958  in NIKE INC on December 24, 2024 and sell it today you would lose (69.00) from holding NIKE INC or give up 0.69% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.72%
Values	Daily Returns

Vulcan Materials  vs.  NIKE INC

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.

654106AH6

Risk-Adjusted Performance

Very Weak

Over the last 90 days NIKE INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 654106AH6 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 654106AH6

The main advantage of trading using opposite Vulcan Materials and 654106AH6 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vulcan Materials position performs unexpectedly, 654106AH6 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 654106AH6 will offset losses from the drop in 654106AH6's long position.

The idea behind Vulcan Materials and NIKE 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.