Correlation Between Vulcan Materials and Holcim
Can any of the company-specific risk be diversified away by investing in both Vulcan Materials and Holcim 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 Holcim into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vulcan Materials and Holcim, you can compare the effects of market volatilities on Vulcan Materials and Holcim 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 Holcim. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vulcan Materials and Holcim.
Diversification Opportunities for Vulcan Materials and Holcim
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vulcan and Holcim is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Vulcan Materials and Holcim in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Holcim 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 Holcim. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Holcim has no effect on the direction of Vulcan Materials i.e., Vulcan Materials and Holcim go up and down completely randomly.
Pair Corralation between Vulcan Materials and Holcim
Considering the 90-day investment horizon Vulcan Materials is expected to generate 1.21 times more return on investment than Holcim. However, Vulcan Materials is 1.21 times more volatile than Holcim. It trades about 0.18 of its potential returns per unit of risk. Holcim is currently generating about 0.04 per unit of risk. If you would invest 24,087 in Vulcan Materials on August 29, 2024 and sell it today you would earn a total of 4,753 from holding Vulcan Materials or generate 19.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.44% |
| Values | Daily Returns |
Vulcan Materials vs. Holcim
Performance |
| Timeline |
| Vulcan Materials |
| Holcim |
Vulcan Materials and Holcim Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vulcan Materials and Holcim
The main advantage of trading using opposite Vulcan Materials and Holcim positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vulcan Materials position performs unexpectedly, Holcim 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 Holcim will offset losses from the drop in Holcim's long position.| Vulcan Materials vs. Eagle Materials | Vulcan Materials vs. CRH PLC ADR | Vulcan Materials vs. Summit Materials | Vulcan Materials vs. Cemex SAB de |
| Holcim vs. HeidelbergCement AG ADR | Holcim vs. Anhui Conch Cement | Holcim vs. Buzzi Unicem SpA | Holcim vs. Wienerberger Baustoffindustrie |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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