Correlation Between Fevertree Drinks and Vulcan Materials

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

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

Diversification Opportunities for Fevertree Drinks and Vulcan Materials

0.36

Correlation Coefficient

Fevertree Drinks  Vulcan Materials

Weak diversification

The 3 months correlation between Fevertree and Vulcan is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Fevertree Drinks PLC and Vulcan Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vulcan Materials and Fevertree Drinks 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 Fevertree Drinks 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 Fevertree Drinks i.e., Fevertree Drinks and Vulcan Materials go up and down completely randomly.

Pair Corralation between Fevertree Drinks and Vulcan Materials

Assuming the 90 days trading horizon Fevertree Drinks PLC is expected to generate 1.16 times more return on investment than Vulcan Materials. However, Fevertree Drinks is 1.16 times more volatile than Vulcan Materials. It trades about 0.15 of its potential returns per unit of risk. Vulcan Materials is currently generating about 0.09 per unit of risk. If you would invest  883.00  in Fevertree Drinks PLC on April 20, 2025 and sell it today you would earn a total of  167.00  from holding Fevertree Drinks PLC or generate 18.91% return on investment over 90 days.

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

Fevertree Drinks PLC  vs.  Vulcan Materials

Fevertree Drinks PLC

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fevertree Drinks PLC are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Fevertree Drinks unveiled solid returns over the last few months and may actually be approaching a breakup point.

Vulcan Materials

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vulcan Materials are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Vulcan Materials may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Fevertree Drinks and Vulcan Materials

The main advantage of trading using opposite Fevertree Drinks and Vulcan Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fevertree Drinks 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 Fevertree Drinks 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.