Correlation Between James Hardie and Vulcan Materials

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

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

Diversification Opportunities for James Hardie and Vulcan Materials

0.18

Correlation Coefficient

James Hardie  Vulcan Materials

Average diversification

The 3 months correlation between James and Vulcan is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding James Hardie Industries and Vulcan Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vulcan Materials and James Hardie 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 James Hardie Industries 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 James Hardie i.e., James Hardie and Vulcan Materials go up and down completely randomly.

Pair Corralation between James Hardie and Vulcan Materials

Considering the 90-day investment horizon James Hardie Industries is expected to generate 2.11 times more return on investment than Vulcan Materials. However, James Hardie is 2.11 times more volatile than Vulcan Materials. It trades about 0.06 of its potential returns per unit of risk. Vulcan Materials is currently generating about 0.03 per unit of risk. If you would invest  2,398  in James Hardie Industries on May 5, 2025 and sell it today you would earn a total of  190.00  from holding James Hardie Industries or generate 7.92% return on investment over 90 days.

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

James Hardie Industries  vs.  Vulcan Materials

James Hardie Industries

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in James Hardie Industries are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady technical indicators, James Hardie may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Vulcan Materials

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vulcan Materials are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound primary indicators, Vulcan Materials is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with James Hardie and Vulcan Materials

The main advantage of trading using opposite James Hardie and Vulcan Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if James Hardie 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 James Hardie Industries 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.

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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.