Correlation Between Heartland Financial and EAGLE MATERIALS
Can any of the company-specific risk be diversified away by investing in both Heartland Financial 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 Heartland Financial and EAGLE MATERIALS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Heartland Financial USA and EAGLE MATERIALS, you can compare the effects of market volatilities on Heartland Financial 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 Heartland Financial with a short position of EAGLE MATERIALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heartland Financial and EAGLE MATERIALS.
Diversification Opportunities for Heartland Financial and EAGLE MATERIALS
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Heartland and EAGLE is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Heartland Financial USA and EAGLE MATERIALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EAGLE MATERIALS and Heartland Financial 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 Heartland Financial USA 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 Heartland Financial i.e., Heartland Financial and EAGLE MATERIALS go up and down completely randomly.
Pair Corralation between Heartland Financial and EAGLE MATERIALS
Assuming the 90 days horizon Heartland Financial is expected to generate 1.42 times less return on investment than EAGLE MATERIALS. In addition to that, Heartland Financial is 1.32 times more volatile than EAGLE MATERIALS. It trades about 0.05 of its total potential returns per unit of risk. EAGLE MATERIALS is currently generating about 0.09 per unit of volatility. If you would invest 12,476 in EAGLE MATERIALS on September 14, 2024 and sell it today you would earn a total of 14,124 from holding EAGLE MATERIALS or generate 113.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
Heartland Financial USA vs. EAGLE MATERIALS
Performance |
| Timeline |
| Heartland Financial USA |
| EAGLE MATERIALS |
Heartland Financial and EAGLE MATERIALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Heartland Financial and EAGLE MATERIALS
The main advantage of trading using opposite Heartland Financial and EAGLE MATERIALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heartland Financial 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's long position.| Heartland Financial vs. EAGLE MATERIALS | Heartland Financial vs. Heidelberg Materials AG | Heartland Financial vs. Compagnie Plastic Omnium | Heartland Financial vs. Mitsubishi Materials |
| EAGLE MATERIALS vs. Apple Inc | EAGLE MATERIALS vs. Apple Inc | EAGLE MATERIALS vs. Apple Inc | EAGLE MATERIALS vs. Apple Inc |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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