Correlation Between Vulcan Materials and CSL

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

By analyzing existing cross correlation between Vulcan Materials and CSL Limited, you can compare the effects of market volatilities on Vulcan Materials and CSL 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 CSL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vulcan Materials and CSL.

Diversification Opportunities for Vulcan Materials and CSL

0.6

Correlation Coefficient

Vulcan Materials  CSL

Poor diversification

The 3 months correlation between Vulcan and CSL is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Vulcan Materials and CSL Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSL Limited 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 CSL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSL Limited has no effect on the direction of Vulcan Materials i.e., Vulcan Materials and CSL go up and down completely randomly.

Pair Corralation between Vulcan Materials and CSL

Assuming the 90 days horizon Vulcan Materials is expected to generate 0.5 times more return on investment than CSL. However, Vulcan Materials is 2.02 times less risky than CSL. It trades about 0.04 of its potential returns per unit of risk. CSL Limited is currently generating about -0.05 per unit of risk. If you would invest  23,918  in Vulcan Materials on May 22, 2025 and sell it today you would earn a total of  682.00  from holding Vulcan Materials or generate 2.85% 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.  CSL Limited

Vulcan Materials

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Vulcan Materials are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Vulcan Materials is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

CSL Limited

Risk-Adjusted Performance

Weakest

Over the last 90 days CSL Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Vulcan Materials and CSL

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

The idea behind Vulcan Materials and CSL Limited 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.