Correlation Between Vulcan Materials and Fast Retailing

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

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

Diversification Opportunities for Vulcan Materials and Fast Retailing

0.34

Correlation Coefficient

Vulcan Materials  Fast Retailing

Weak diversification

The 3 months correlation between Vulcan and Fast is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Vulcan Materials and Fast Retailing Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fast Retailing 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 Fast Retailing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fast Retailing has no effect on the direction of Vulcan Materials i.e., Vulcan Materials and Fast Retailing go up and down completely randomly.

Pair Corralation between Vulcan Materials and Fast Retailing

Assuming the 90 days horizon Vulcan Materials is expected to generate 0.93 times more return on investment than Fast Retailing. However, Vulcan Materials is 1.08 times less risky than Fast Retailing. It trades about 0.04 of its potential returns per unit of risk. Fast Retailing Co is currently generating about -0.09 per unit of risk. If you would invest  21,760  in Vulcan Materials on April 24, 2025 and sell it today you would earn a total of  640.00  from holding Vulcan Materials or generate 2.94% return on investment over 90 days.

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

Vulcan Materials  vs.  Fast Retailing Co

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. Despite nearly stable basic indicators, Vulcan Materials is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Fast Retailing

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fast Retailing Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Vulcan Materials and Fast Retailing

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

The idea behind Vulcan Materials and Fast Retailing Co 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.