Correlation Between Cemex SAB and Eagle Materials
Can any of the company-specific risk be diversified away by investing in both Cemex SAB 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 Cemex SAB and Eagle Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cemex SAB de and Eagle Materials, you can compare the effects of market volatilities on Cemex SAB 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 Cemex SAB with a short position of Eagle Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cemex SAB and Eagle Materials.
Diversification Opportunities for Cemex SAB and Eagle Materials
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cemex and Eagle is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Cemex SAB de and Eagle Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Materials and Cemex SAB 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 Cemex SAB de 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 Cemex SAB i.e., Cemex SAB and Eagle Materials go up and down completely randomly.
Pair Corralation between Cemex SAB and Eagle Materials
Allowing for the 90-day total investment horizon Cemex SAB de is expected to under-perform the Eagle Materials. In addition to that, Cemex SAB is 2.05 times more volatile than Eagle Materials. It trades about -0.09 of its total potential returns per unit of risk. Eagle Materials is currently generating about 0.24 per unit of volatility. If you would invest 28,816 in Eagle Materials on August 26, 2024 and sell it today you would earn a total of 2,619 from holding Eagle Materials or generate 9.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cemex SAB de vs. Eagle Materials
Performance |
| Timeline |
| Cemex SAB de |
| Eagle Materials |
Cemex SAB and Eagle Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cemex SAB and Eagle Materials
The main advantage of trading using opposite Cemex SAB and Eagle Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cemex SAB 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.| Cemex SAB vs. Holcim | Cemex SAB vs. Lafargeholcim Ltd ADR | Cemex SAB vs. Eagle Materials | Cemex SAB vs. The Monarch Cement |
| Eagle Materials vs. Vulcan Materials | Eagle Materials vs. CRH PLC ADR | Eagle Materials vs. Summit Materials | Eagle Materials vs. Cemex SAB de |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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