Correlation Between Vulcan Materials and Healthpeak Properties

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

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

Diversification Opportunities for Vulcan Materials and Healthpeak Properties

0.55

Correlation Coefficient

Vulcan Materials  Healthpeak Properties

Very weak diversification

The 3 months correlation between Vulcan and Healthpeak is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Vulcan Materials and Healthpeak Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Healthpeak Properties 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 Healthpeak Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Healthpeak Properties has no effect on the direction of Vulcan Materials i.e., Vulcan Materials and Healthpeak Properties go up and down completely randomly.

Pair Corralation between Vulcan Materials and Healthpeak Properties

Assuming the 90 days trading horizon Vulcan Materials is expected to under-perform the Healthpeak Properties. But the stock apears to be less risky and, when comparing its historical volatility, Vulcan Materials is 1.92 times less risky than Healthpeak Properties. The stock trades about -0.27 of its potential returns per unit of risk. The Healthpeak Properties is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  12,200  in Healthpeak Properties on October 22, 2024 and sell it today you would earn a total of  288.00  from holding Healthpeak Properties or generate 2.36% return on investment over 90 days.

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

Vulcan Materials  vs.  Healthpeak Properties

Vulcan Materials

Risk-Adjusted Performance

2 of 100

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 somewhat strong primary indicators, Vulcan Materials is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Healthpeak Properties

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Healthpeak Properties has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Healthpeak Properties is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Vulcan Materials and Healthpeak Properties

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

The idea behind Vulcan Materials and Healthpeak Properties 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 Transaction History module to view history of all your transactions and understand their impact on performance.