Correlation Between Ibstock Plc and Vulcan Materials

Can any of the company-specific risk be diversified away by investing in both Ibstock Plc and Vulcan 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 Ibstock Plc and Vulcan Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ibstock plc and Vulcan Materials, you can compare the effects of market volatilities on Ibstock Plc and Vulcan 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 Ibstock Plc with a short position of Vulcan Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ibstock Plc and Vulcan Materials.

Diversification Opportunities for Ibstock Plc and Vulcan Materials

-0.13

Correlation Coefficient

Ibstock Plc  Vulcan Materials

Good diversification

The 3 months correlation between Ibstock and Vulcan is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Ibstock plc and Vulcan Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vulcan Materials and Ibstock 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 Ibstock plc are associated (or correlated) with Vulcan Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vulcan Materials has no effect on the direction of Ibstock Plc i.e., Ibstock Plc and Vulcan Materials go up and down completely randomly.

Pair Corralation between Ibstock Plc and Vulcan Materials

If you would invest  145.00  in Ibstock plc on February 3, 2024 and sell it today you would earn a total of  0.00  from holding Ibstock plc or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Ibstock plc  vs.  Vulcan Materials

Ibstock plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ibstock plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's technical indicators remain nearly stable which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Vulcan Materials

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vulcan Materials are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak primary indicators, Vulcan Materials exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ibstock Plc and Vulcan Materials

The main advantage of trading using opposite Ibstock Plc and Vulcan Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ibstock Plc position performs unexpectedly, Vulcan 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 Vulcan Materials will offset losses from the drop in Vulcan Materials' long position.

The idea behind Ibstock plc and Vulcan Materials pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.