Correlation Between Vulcan Materials and Cairn Homes
Can any of the company-specific risk be diversified away by investing in both Vulcan Materials and Cairn Homes 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 Cairn Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vulcan Materials Co and Cairn Homes PLC, you can compare the effects of market volatilities on Vulcan Materials and Cairn Homes 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 Cairn Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vulcan Materials and Cairn Homes.
Diversification Opportunities for Vulcan Materials and Cairn Homes
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vulcan and Cairn is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Vulcan Materials Co and Cairn Homes PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cairn Homes PLC 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 Co are associated (or correlated) with Cairn Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cairn Homes PLC has no effect on the direction of Vulcan Materials i.e., Vulcan Materials and Cairn Homes go up and down completely randomly.
Pair Corralation between Vulcan Materials and Cairn Homes
Assuming the 90 days trading horizon Vulcan Materials is expected to generate 2.04 times less return on investment than Cairn Homes. But when comparing it to its historical volatility, Vulcan Materials Co is 1.16 times less risky than Cairn Homes. It trades about 0.07 of its potential returns per unit of risk. Cairn Homes PLC is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 7,044 in Cairn Homes PLC on September 20, 2024 and sell it today you would earn a total of 11,996 from holding Cairn Homes PLC or generate 170.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 96.81% |
| Values | Daily Returns |
Vulcan Materials Co vs. Cairn Homes PLC
Performance |
| Timeline |
| Vulcan Materials |
| Cairn Homes PLC |
Vulcan Materials and Cairn Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vulcan Materials and Cairn Homes
The main advantage of trading using opposite Vulcan Materials and Cairn Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vulcan Materials position performs unexpectedly, Cairn Homes 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 Cairn Homes will offset losses from the drop in Cairn Homes' long position.| Vulcan Materials vs. Samsung Electronics Co | Vulcan Materials vs. Samsung Electronics Co | Vulcan Materials vs. Hyundai Motor | Vulcan Materials vs. Reliance Industries Ltd |
| Cairn Homes vs. Litigation Capital Management | Cairn Homes vs. Liontrust Asset Management | Cairn Homes vs. Panther Metals PLC | Cairn Homes vs. Jacquet Metal Service |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
Other Complementary Tools
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance |