Correlation Between EAGLE MATERIALS and SERITAGE GWTH
Can any of the company-specific risk be diversified away by investing in both EAGLE MATERIALS and SERITAGE GWTH 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 EAGLE MATERIALS and SERITAGE GWTH into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EAGLE MATERIALS and SERITAGE GWTH PRA, you can compare the effects of market volatilities on EAGLE MATERIALS and SERITAGE GWTH 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 EAGLE MATERIALS with a short position of SERITAGE GWTH. Check out your portfolio center. Please also check ongoing floating volatility patterns of EAGLE MATERIALS and SERITAGE GWTH.
Diversification Opportunities for EAGLE MATERIALS and SERITAGE GWTH
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between EAGLE and SERITAGE is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding EAGLE MATERIALS and SERITAGE GWTH PRA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SERITAGE GWTH PRA and EAGLE MATERIALS 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 EAGLE MATERIALS are associated (or correlated) with SERITAGE GWTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SERITAGE GWTH PRA has no effect on the direction of EAGLE MATERIALS i.e., EAGLE MATERIALS and SERITAGE GWTH go up and down completely randomly.
Pair Corralation between EAGLE MATERIALS and SERITAGE GWTH
Assuming the 90 days trading horizon EAGLE MATERIALS is expected to generate 0.67 times more return on investment than SERITAGE GWTH. However, EAGLE MATERIALS is 1.5 times less risky than SERITAGE GWTH. It trades about 0.1 of its potential returns per unit of risk. SERITAGE GWTH PRA is currently generating about -0.06 per unit of risk. If you would invest 12,848 in EAGLE MATERIALS on August 30, 2024 and sell it today you would earn a total of 16,152 from holding EAGLE MATERIALS or generate 125.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
EAGLE MATERIALS vs. SERITAGE GWTH PRA
Performance |
| Timeline |
| EAGLE MATERIALS |
| SERITAGE GWTH PRA |
EAGLE MATERIALS and SERITAGE GWTH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EAGLE MATERIALS and SERITAGE GWTH
The main advantage of trading using opposite EAGLE MATERIALS and SERITAGE GWTH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EAGLE MATERIALS position performs unexpectedly, SERITAGE GWTH 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 SERITAGE GWTH will offset losses from the drop in SERITAGE GWTH's long position.| EAGLE MATERIALS vs. Apple Inc | EAGLE MATERIALS vs. Apple Inc | EAGLE MATERIALS vs. Superior Plus Corp | EAGLE MATERIALS vs. SIVERS SEMICONDUCTORS AB |
| SERITAGE GWTH vs. Tanger Factory Outlet | SERITAGE GWTH vs. Hammerson plc | SERITAGE GWTH vs. Capital Counties Properties |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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