Correlation Between LEGACY IRON and Eagle Materials
Can any of the company-specific risk be diversified away by investing in both LEGACY IRON 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 LEGACY IRON and Eagle Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LEGACY IRON ORE and Eagle Materials, you can compare the effects of market volatilities on LEGACY IRON 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 LEGACY IRON with a short position of Eagle Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of LEGACY IRON and Eagle Materials.
Diversification Opportunities for LEGACY IRON and Eagle Materials
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between LEGACY and Eagle is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding LEGACY IRON ORE and Eagle Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Materials and LEGACY IRON 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 LEGACY IRON ORE 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 LEGACY IRON i.e., LEGACY IRON and Eagle Materials go up and down completely randomly.
Pair Corralation between LEGACY IRON and Eagle Materials
If you would invest 26,000 in Eagle Materials on September 1, 2024 and sell it today you would earn a total of 2,800 from holding Eagle Materials or generate 10.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LEGACY IRON ORE vs. Eagle Materials
Performance |
| Timeline |
| LEGACY IRON ORE |
| Eagle Materials |
LEGACY IRON and Eagle Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LEGACY IRON and Eagle Materials
The main advantage of trading using opposite LEGACY IRON and Eagle Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LEGACY IRON 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.| LEGACY IRON vs. SIVERS SEMICONDUCTORS AB | LEGACY IRON vs. Darden Restaurants | LEGACY IRON vs. Reliance Steel Aluminum | LEGACY IRON vs. Q2M Managementberatung AG |
| Eagle Materials vs. AUST AGRICULTURAL | Eagle Materials vs. Daito Trust Construction | Eagle Materials vs. Granite Construction | Eagle Materials vs. ePlay Digital |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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