Correlation Between CANON MARKETING and EAGLE MATERIALS
Can any of the company-specific risk be diversified away by investing in both CANON MARKETING 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 CANON MARKETING and EAGLE MATERIALS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CANON MARKETING JP and EAGLE MATERIALS, you can compare the effects of market volatilities on CANON MARKETING 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 CANON MARKETING with a short position of EAGLE MATERIALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of CANON MARKETING and EAGLE MATERIALS.
Diversification Opportunities for CANON MARKETING and EAGLE MATERIALS
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between CANON and EAGLE is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding CANON MARKETING JP and EAGLE MATERIALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EAGLE MATERIALS and CANON MARKETING 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 CANON MARKETING JP 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 CANON MARKETING i.e., CANON MARKETING and EAGLE MATERIALS go up and down completely randomly.
Pair Corralation between CANON MARKETING and EAGLE MATERIALS
Assuming the 90 days trading horizon CANON MARKETING is expected to generate 1.17 times less return on investment than EAGLE MATERIALS. But when comparing it to its historical volatility, CANON MARKETING JP is 2.43 times less risky than EAGLE MATERIALS. It trades about 0.44 of its potential returns per unit of risk. EAGLE MATERIALS is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 26,200 in EAGLE MATERIALS on September 1, 2024 and sell it today you would earn a total of 3,000 from holding EAGLE MATERIALS or generate 11.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CANON MARKETING JP vs. EAGLE MATERIALS
Performance |
| Timeline |
| CANON MARKETING JP |
| EAGLE MATERIALS |
CANON MARKETING and EAGLE MATERIALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CANON MARKETING and EAGLE MATERIALS
The main advantage of trading using opposite CANON MARKETING and EAGLE MATERIALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CANON MARKETING 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.| CANON MARKETING vs. SIVERS SEMICONDUCTORS AB | CANON MARKETING vs. Darden Restaurants | CANON MARKETING vs. Reliance Steel Aluminum | CANON MARKETING vs. Q2M Managementberatung AG |
| EAGLE MATERIALS vs. SIVERS SEMICONDUCTORS AB | EAGLE MATERIALS vs. Darden Restaurants | EAGLE MATERIALS vs. Reliance Steel Aluminum | EAGLE MATERIALS vs. Q2M Managementberatung AG |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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