Correlation Between Vale SA and Vaughan Nelson

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

By analyzing existing cross correlation between Vale SA ADR and Vaughan Nelson International, you can compare the effects of market volatilities on Vale SA and Vaughan Nelson 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 Vale SA with a short position of Vaughan Nelson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vale SA and Vaughan Nelson.

Diversification Opportunities for Vale SA and Vaughan Nelson

0.64

Correlation Coefficient

Vale SA  Vaughan Nelson

Poor diversification

The 3 months correlation between Vale and Vaughan is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Vale SA ADR and Vaughan Nelson International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vaughan Nelson Inter and Vale SA 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 Vale SA ADR are associated (or correlated) with Vaughan Nelson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vaughan Nelson Inter has no effect on the direction of Vale SA i.e., Vale SA and Vaughan Nelson go up and down completely randomly.

Pair Corralation between Vale SA and Vaughan Nelson

Given the investment horizon of 90 days Vale SA is expected to generate 2.49 times less return on investment than Vaughan Nelson. In addition to that, Vale SA is 1.77 times more volatile than Vaughan Nelson International. It trades about 0.05 of its total potential returns per unit of risk. Vaughan Nelson International is currently generating about 0.2 per unit of volatility. If you would invest  1,487  in Vaughan Nelson International on May 6, 2025 and sell it today you would earn a total of  199.00  from holding Vaughan Nelson International or generate 13.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Vale SA ADR  vs.  Vaughan Nelson International

Vale SA ADR

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vale SA ADR are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound essential indicators, Vale SA is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Vaughan Nelson Inter

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vaughan Nelson International are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward-looking indicators, Vaughan Nelson showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vale SA and Vaughan Nelson

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

The idea behind Vale SA ADR and Vaughan Nelson International 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 Commodity Directory module to find actively traded commodities issued by global exchanges.