Correlation Between Vulcan Materials and CRH PLC
Can any of the company-specific risk be diversified away by investing in both Vulcan Materials and CRH PLC 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 CRH PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vulcan Materials and CRH PLC ADR, you can compare the effects of market volatilities on Vulcan Materials and CRH PLC 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 CRH PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vulcan Materials and CRH PLC.
Diversification Opportunities for Vulcan Materials and CRH PLC
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vulcan and CRH is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Vulcan Materials and CRH PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CRH PLC ADR 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 CRH PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CRH PLC ADR has no effect on the direction of Vulcan Materials i.e., Vulcan Materials and CRH PLC go up and down completely randomly.
Pair Corralation between Vulcan Materials and CRH PLC
Considering the 90-day investment horizon Vulcan Materials is expected to generate 1.98 times less return on investment than CRH PLC. But when comparing it to its historical volatility, Vulcan Materials is 1.14 times less risky than CRH PLC. It trades about 0.07 of its potential returns per unit of risk. CRH PLC ADR is currently generating about 0.13 of returns per unit of risk over similar time horizon. 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 Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vulcan Materials vs. CRH PLC ADR
Performance |
| Timeline |
| Vulcan Materials |
| CRH PLC ADR |
Vulcan Materials and CRH PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vulcan Materials and CRH PLC
The main advantage of trading using opposite Vulcan Materials and CRH PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vulcan Materials position performs unexpectedly, CRH PLC 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 CRH PLC will offset losses from the drop in CRH PLC's long position.| Vulcan Materials vs. Holcim | Vulcan Materials vs. Lafargeholcim Ltd ADR | Vulcan Materials vs. Eagle Materials | Vulcan Materials vs. The Monarch Cement |
| CRH PLC vs. Martin Marietta Materials | CRH PLC vs. Eagle Materials | CRH PLC vs. Summit Materials | CRH PLC vs. United States Lime |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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