Correlation Between CRH PLC and Fletcher Building
Can any of the company-specific risk be diversified away by investing in both CRH PLC and Fletcher Building 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 CRH PLC and Fletcher Building into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CRH PLC ADR and Fletcher Building Ltd, you can compare the effects of market volatilities on CRH PLC and Fletcher Building 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 CRH PLC with a short position of Fletcher Building. Check out your portfolio center. Please also check ongoing floating volatility patterns of CRH PLC and Fletcher Building.
Diversification Opportunities for CRH PLC and Fletcher Building
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CRH and Fletcher is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding CRH PLC ADR and Fletcher Building Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fletcher Building and CRH PLC 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 CRH PLC ADR are associated (or correlated) with Fletcher Building. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fletcher Building has no effect on the direction of CRH PLC i.e., CRH PLC and Fletcher Building go up and down completely randomly.
Pair Corralation between CRH PLC and Fletcher Building
Considering the 90-day investment horizon CRH PLC ADR is expected to generate 7.97 times more return on investment than Fletcher Building. However, CRH PLC is 7.97 times more volatile than Fletcher Building Ltd. It trades about 0.27 of its potential returns per unit of risk. Fletcher Building Ltd is currently generating about 0.22 per unit of risk. If you would invest 9,271 in CRH PLC ADR on November 3, 2024 and sell it today you would earn a total of 632.00 from holding CRH PLC ADR or generate 6.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
CRH PLC ADR vs. Fletcher Building Ltd
Performance |
| Timeline |
| CRH PLC ADR |
| Fletcher Building |
CRH PLC and Fletcher Building Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CRH PLC and Fletcher Building
The main advantage of trading using opposite CRH PLC and Fletcher Building positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CRH PLC position performs unexpectedly, Fletcher Building 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 Fletcher Building will offset losses from the drop in Fletcher Building's long position.| CRH PLC vs. Martin Marietta Materials | CRH PLC vs. Eagle Materials | CRH PLC vs. Summit Materials | CRH PLC vs. United States Lime |
| Fletcher Building vs. Cementos Pacasmayo SAA | Fletcher Building vs. Summit Materials | Fletcher Building vs. Eagle Materials | Fletcher Building vs. CRH PLC ADR |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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