Correlation Between CEMEX SAB and Vulcan Materials

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Can any of the company-specific risk be diversified away by investing in both CEMEX SAB and Vulcan Materials 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 CEMEX SAB and Vulcan Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CEMEX SAB De and Vulcan Materials, you can compare the effects of market volatilities on CEMEX SAB and Vulcan Materials 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 CEMEX SAB with a short position of Vulcan Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of CEMEX SAB and Vulcan Materials.

Diversification Opportunities for CEMEX SAB and Vulcan Materials

0.36
  Correlation Coefficient

Weak diversification

The 3 months correlation between CEMEX and Vulcan is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding CEMEX SAB De and Vulcan Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vulcan Materials and CEMEX SAB 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 CEMEX SAB De are associated (or correlated) with Vulcan Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vulcan Materials has no effect on the direction of CEMEX SAB i.e., CEMEX SAB and Vulcan Materials go up and down completely randomly.

Pair Corralation between CEMEX SAB and Vulcan Materials

Assuming the 90 days horizon CEMEX SAB De is expected to generate 4.27 times more return on investment than Vulcan Materials. However, CEMEX SAB is 4.27 times more volatile than Vulcan Materials. It trades about 0.19 of its potential returns per unit of risk. Vulcan Materials is currently generating about 0.17 per unit of risk. If you would invest  76.00  in CEMEX SAB De on December 29, 2023 and sell it today you would earn a total of  13.00  from holding CEMEX SAB De or generate 17.11% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

CEMEX SAB De  vs.  Vulcan Materials

 Performance 
       Timeline  
CEMEX SAB De 

Risk-Adjusted Performance

4 of 100

 
Low
 
High
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in CEMEX SAB De are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent basic indicators, CEMEX SAB reported solid returns over the last few months and may actually be approaching a breakup point.
Vulcan Materials 

Risk-Adjusted Performance

17 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Vulcan Materials are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent primary indicators, Vulcan Materials exhibited solid returns over the last few months and may actually be approaching a breakup point.

CEMEX SAB and Vulcan Materials Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with CEMEX SAB and Vulcan Materials

The main advantage of trading using opposite CEMEX SAB and Vulcan Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CEMEX SAB position performs unexpectedly, Vulcan Materials 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 Vulcan Materials will offset losses from the drop in Vulcan Materials' long position.
The idea behind CEMEX SAB De and Vulcan Materials 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.

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