Correlation Between Naturhouse Health and Eagle Materials
Can any of the company-specific risk be diversified away by investing in both Naturhouse Health 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 Naturhouse Health and Eagle Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Naturhouse Health SA and Eagle Materials, you can compare the effects of market volatilities on Naturhouse Health 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 Naturhouse Health with a short position of Eagle Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Naturhouse Health and Eagle Materials.
Diversification Opportunities for Naturhouse Health and Eagle Materials
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Naturhouse and Eagle is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Naturhouse Health SA and Eagle Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Materials and Naturhouse Health 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 Naturhouse Health SA 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 Naturhouse Health i.e., Naturhouse Health and Eagle Materials go up and down completely randomly.
Pair Corralation between Naturhouse Health and Eagle Materials
Assuming the 90 days horizon Naturhouse Health is expected to generate 2.5 times less return on investment than Eagle Materials. But when comparing it to its historical volatility, Naturhouse Health SA is 1.15 times less risky than Eagle Materials. It trades about 0.03 of its potential returns per unit of risk. Eagle Materials is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 17,093 in Eagle Materials on September 12, 2024 and sell it today you would earn a total of 9,907 from holding Eagle Materials or generate 57.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.72% |
| Values | Daily Returns |
Naturhouse Health SA vs. Eagle Materials
Performance |
| Timeline |
| Naturhouse Health |
| Eagle Materials |
Naturhouse Health and Eagle Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Naturhouse Health and Eagle Materials
The main advantage of trading using opposite Naturhouse Health and Eagle Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Naturhouse Health 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.| Naturhouse Health vs. Eagle Materials | Naturhouse Health vs. Sumitomo Rubber Industries | Naturhouse Health vs. Heidelberg Materials AG | Naturhouse Health vs. SALESFORCE INC CDR |
| Eagle Materials vs. Vulcan Materials | Eagle Materials vs. Heidelberg Materials 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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