Correlation Between VULCAN MATERIALS and Tokio Marine

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

By analyzing existing cross correlation between VULCAN MATERIALS and Tokio Marine Holdings, you can compare the effects of market volatilities on VULCAN MATERIALS and Tokio Marine 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 Tokio Marine. Check out your portfolio center. Please also check ongoing floating volatility patterns of VULCAN MATERIALS and Tokio Marine.

Diversification Opportunities for VULCAN MATERIALS and Tokio Marine

-0.31

Correlation Coefficient

VULCAN MATERIALS  Tokio Marine

Very good diversification

The 3 months correlation between VULCAN and Tokio is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding VULCAN MATERIALS and Tokio Marine Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tokio Marine Holdings 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 Tokio Marine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tokio Marine Holdings has no effect on the direction of VULCAN MATERIALS i.e., VULCAN MATERIALS and Tokio Marine go up and down completely randomly.

Pair Corralation between VULCAN MATERIALS and Tokio Marine

Assuming the 90 days trading horizon VULCAN MATERIALS is expected to under-perform the Tokio Marine. But the stock apears to be less risky and, when comparing its historical volatility, VULCAN MATERIALS is 1.26 times less risky than Tokio Marine. The stock trades about -0.14 of its potential returns per unit of risk. The Tokio Marine Holdings is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  3,370  in Tokio Marine Holdings on December 21, 2024 and sell it today you would earn a total of  389.00  from holding Tokio Marine Holdings or generate 11.54% return on investment over 90 days.

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

VULCAN MATERIALS  vs.  Tokio Marine Holdings

VULCAN MATERIALS

Risk-Adjusted Performance

Very Weak

Over the last 90 days VULCAN MATERIALS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Tokio Marine Holdings

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tokio Marine Holdings are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Tokio Marine reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with VULCAN MATERIALS and Tokio Marine

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

The idea behind VULCAN MATERIALS and Tokio Marine Holdings 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.