Correlation Between Vulcan Materials and Eagle Materials
Can any of the company-specific risk be diversified away by investing in both Vulcan Materials and Eagle 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 Vulcan Materials and Eagle Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vulcan Materials and Eagle Materials, you can compare the effects of market volatilities on Vulcan Materials and Eagle 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 Vulcan Materials with a short position of Eagle Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vulcan Materials and Eagle Materials.
Diversification Opportunities for Vulcan Materials and Eagle Materials
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Vulcan and Eagle is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Vulcan Materials and Eagle Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Materials 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 are associated (or correlated) with Eagle Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagle Materials has no effect on the direction of Vulcan Materials i.e., Vulcan Materials and Eagle Materials go up and down completely randomly.
Pair Corralation between Vulcan Materials and Eagle Materials
Assuming the 90 days horizon Vulcan Materials is expected to generate 1.29 times more return on investment than Eagle Materials. However, Vulcan Materials is 1.29 times more volatile than Eagle Materials. It trades about 0.23 of its potential returns per unit of risk. Eagle Materials is currently generating about 0.26 per unit of risk. If you would invest 23,756 in Vulcan Materials on August 29, 2024 and sell it today you would earn a total of 3,244 from holding Vulcan Materials or generate 13.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vulcan Materials vs. Eagle Materials
Performance |
| Timeline |
| Vulcan Materials |
| Eagle Materials |
Vulcan Materials and Eagle Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vulcan Materials and Eagle Materials
The main advantage of trading using opposite Vulcan Materials and Eagle Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vulcan Materials position performs unexpectedly, Eagle 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 Eagle Materials will offset losses from the drop in Eagle Materials' long position.| Vulcan Materials vs. Superior Plus Corp | Vulcan Materials vs. NMI Holdings | Vulcan Materials vs. Origin Agritech | Vulcan Materials vs. SIVERS SEMICONDUCTORS AB |
| Eagle Materials vs. Superior Plus Corp | Eagle Materials vs. NMI Holdings | Eagle Materials vs. Origin Agritech | Eagle Materials vs. SIVERS SEMICONDUCTORS AB |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
Other Complementary Tools
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes |