Correlation Between Materialise and Eagle Materials
Can any of the company-specific risk be diversified away by investing in both Materialise and Eagle 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 Materialise and Eagle Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Materialise NV and Eagle Materials, you can compare the effects of market volatilities on Materialise and Eagle 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 Materialise with a short position of Eagle Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Materialise and Eagle Materials.
Diversification Opportunities for Materialise and Eagle Materials
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Materialise and Eagle is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Materialise NV and Eagle Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Materials and Materialise 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 Materialise NV are associated (or correlated) with Eagle Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagle Materials has no effect on the direction of Materialise i.e., Materialise and Eagle Materials go up and down completely randomly.
Pair Corralation between Materialise and Eagle Materials
Assuming the 90 days trading horizon Materialise NV is expected to generate 1.69 times more return on investment than Eagle Materials. However, Materialise is 1.69 times more volatile than Eagle Materials. It trades about 0.16 of its potential returns per unit of risk. Eagle Materials is currently generating about 0.15 per unit of risk. If you would invest 496.00 in Materialise NV on August 25, 2024 and sell it today you would earn a total of 204.00 from holding Materialise NV or generate 41.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Materialise NV vs. Eagle Materials
Performance |
| Timeline |
| Materialise NV |
| Eagle Materials |
Materialise and Eagle Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Materialise and Eagle Materials
The main advantage of trading using opposite Materialise and Eagle Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Materialise position performs unexpectedly, Eagle 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 Eagle Materials will offset losses from the drop in Eagle Materials' long position.| Materialise vs. Apple Inc | Materialise vs. Apple Inc | Materialise vs. Apple Inc | Materialise vs. Apple Inc |
| Eagle Materials vs. Compagnie de Saint Gobain | Eagle Materials vs. HeidelbergCement AG | Eagle Materials vs. Superior Plus Corp | Eagle Materials vs. NMI Holdings |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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