Correlation Between Vulcan Materials and Cemex SAB

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

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

Diversification Opportunities for Vulcan Materials and Cemex SAB

-0.53

Correlation Coefficient

Vulcan Materials  Cemex SAB

Excellent diversification

The 3 months correlation between Vulcan and Cemex is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Vulcan Materials and Cemex SAB de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cemex SAB de 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 Cemex SAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cemex SAB de has no effect on the direction of Vulcan Materials i.e., Vulcan Materials and Cemex SAB go up and down completely randomly.

Pair Corralation between Vulcan Materials and Cemex SAB

Considering the 90-day investment horizon Vulcan Materials is expected to generate 0.61 times more return on investment than Cemex SAB. However, Vulcan Materials is 1.64 times less risky than Cemex SAB. It trades about 0.19 of its potential returns per unit of risk. Cemex SAB de is currently generating about -0.04 per unit of risk. If you would invest  23,861  in Vulcan Materials on August 31, 2024 and sell it today you would earn a total of  4,778  from holding Vulcan Materials or generate 20.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Vulcan Materials  vs.  Cemex SAB de

Vulcan Materials

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vulcan Materials are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak primary indicators, Vulcan Materials exhibited solid returns over the last few months and may actually be approaching a breakup point.

Cemex SAB de

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cemex SAB de has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Vulcan Materials and Cemex SAB

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

The idea behind Vulcan Materials and Cemex SAB de 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.