Correlation Between CRH PLC and James Hardie
Can any of the company-specific risk be diversified away by investing in both CRH PLC and James Hardie 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 James Hardie 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 James Hardie Industries, you can compare the effects of market volatilities on CRH PLC and James Hardie 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 James Hardie. Check out your portfolio center. Please also check ongoing floating volatility patterns of CRH PLC and James Hardie.
Diversification Opportunities for CRH PLC and James Hardie
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CRH and James is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding CRH PLC ADR and James Hardie Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on James Hardie Industries 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 James Hardie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of James Hardie Industries has no effect on the direction of CRH PLC i.e., CRH PLC and James Hardie go up and down completely randomly.
Pair Corralation between CRH PLC and James Hardie
Considering the 90-day investment horizon CRH PLC ADR is expected to generate 0.69 times more return on investment than James Hardie. However, CRH PLC ADR is 1.45 times less risky than James Hardie. It trades about 0.13 of its potential returns per unit of risk. James Hardie Industries is currently generating about 0.06 per unit of risk. If you would invest 3,752 in CRH PLC ADR on August 27, 2024 and sell it today you would earn a total of 6,388 from holding CRH PLC ADR or generate 170.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CRH PLC ADR vs. James Hardie Industries
Performance |
| Timeline |
| CRH PLC ADR |
| James Hardie Industries |
CRH PLC and James Hardie Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CRH PLC and James Hardie
The main advantage of trading using opposite CRH PLC and James Hardie positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CRH PLC position performs unexpectedly, James Hardie 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 James Hardie will offset losses from the drop in James Hardie'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 |
| James Hardie vs. Holcim | James Hardie vs. Lafargeholcim Ltd ADR | James Hardie vs. Eagle Materials | James Hardie vs. The Monarch Cement |
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 CEOs Directory module to screen CEOs from public companies around the world.
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