Correlation Between Vulcan Materials and Lafargeholcim
Can any of the company-specific risk be diversified away by investing in both Vulcan Materials and Lafargeholcim 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 Lafargeholcim into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vulcan Materials and Lafargeholcim Ltd ADR, you can compare the effects of market volatilities on Vulcan Materials and Lafargeholcim 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 Lafargeholcim. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vulcan Materials and Lafargeholcim.
Diversification Opportunities for Vulcan Materials and Lafargeholcim
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vulcan and Lafargeholcim is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Vulcan Materials and Lafargeholcim Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lafargeholcim 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 Lafargeholcim. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lafargeholcim ADR has no effect on the direction of Vulcan Materials i.e., Vulcan Materials and Lafargeholcim go up and down completely randomly.
Pair Corralation between Vulcan Materials and Lafargeholcim
Considering the 90-day investment horizon Vulcan Materials is expected to generate 1.42 times more return on investment than Lafargeholcim. However, Vulcan Materials is 1.42 times more volatile than Lafargeholcim Ltd ADR. It trades about 0.19 of its potential returns per unit of risk. Lafargeholcim Ltd ADR is currently generating about 0.09 per unit of risk. If you would invest 23,861 in Vulcan Materials on August 31, 2024 and sell it today you would earn a total of 4,778 from holding Vulcan Materials or generate 20.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vulcan Materials vs. Lafargeholcim Ltd ADR
Performance |
| Timeline |
| Vulcan Materials |
| Lafargeholcim ADR |
Vulcan Materials and Lafargeholcim Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vulcan Materials and Lafargeholcim
The main advantage of trading using opposite Vulcan Materials and Lafargeholcim positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vulcan Materials position performs unexpectedly, Lafargeholcim 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 Lafargeholcim will offset losses from the drop in Lafargeholcim'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 |
| Lafargeholcim vs. Anhui Conch Cement | Lafargeholcim vs. Buzzi Unicem SpA | Lafargeholcim vs. Wienerberger Baustoffindustrie | Lafargeholcim vs. China National Building |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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