Correlation Between Dupont De and Eagle Materials
Can any of the company-specific risk be diversified away by investing in both Dupont De 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 Dupont De and Eagle Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dupont De Nemours and Eagle Materials, you can compare the effects of market volatilities on Dupont De 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 Dupont De with a short position of Eagle Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dupont De and Eagle Materials.
Diversification Opportunities for Dupont De and Eagle Materials
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Dupont and Eagle is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Dupont De Nemours and Eagle Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Materials and Dupont De 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 Dupont De Nemours 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 Dupont De i.e., Dupont De and Eagle Materials go up and down completely randomly.
Pair Corralation between Dupont De and Eagle Materials
Allowing for the 90-day total investment horizon Dupont De is expected to generate 9.72 times less return on investment than Eagle Materials. But when comparing it to its historical volatility, Dupont De Nemours is 1.84 times less risky than Eagle Materials. It trades about 0.02 of its potential returns per unit of risk. Eagle Materials is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 21,552 in Eagle Materials on August 25, 2024 and sell it today you would earn a total of 7,848 from holding Eagle Materials or generate 36.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 97.69% |
| Values | Daily Returns |
Dupont De Nemours vs. Eagle Materials
Performance |
| Timeline |
| Dupont De Nemours |
| Eagle Materials |
Dupont De and Eagle Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dupont De and Eagle Materials
The main advantage of trading using opposite Dupont De and Eagle Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dupont De 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.| Dupont De vs. Olin Corporation | Dupont De vs. Cabot | Dupont De vs. Kronos Worldwide | Dupont De vs. LyondellBasell Industries NV |
| Eagle Materials vs. Compagnie de Saint Gobain | Eagle Materials vs. HeidelbergCement 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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