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

0.27

Correlation Coefficient

Vulcan Materials  Lafargeholcim

Modest diversification

The 3 months correlation between Vulcan and Lafargeholcim is 0.27. 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 1.86 times less return on investment than Lafargeholcim. But when comparing it to its historical volatility, Vulcan Materials is 1.02 times less risky than Lafargeholcim. It trades about 0.06 of its potential returns per unit of risk. Lafargeholcim Ltd ADR is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,100  in Lafargeholcim Ltd ADR on May 6, 2025 and sell it today you would earn a total of  462.00  from holding Lafargeholcim Ltd ADR or generate 42.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.56%
Values	Daily Returns

Vulcan Materials  vs.  Lafargeholcim Ltd ADR

Vulcan Materials

Risk-Adjusted Performance

Insignificant

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. 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.

Lafargeholcim ADR

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lafargeholcim Ltd ADR are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak essential indicators, Lafargeholcim showed solid returns over the last few months and may actually be approaching a breakup point.

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.

The idea behind Vulcan Materials and Lafargeholcim Ltd ADR 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.