Correlation Between EAGLE MATERIALS and Heartland Financial
Can any of the company-specific risk be diversified away by investing in both EAGLE MATERIALS and Heartland Financial 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 Heartland Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EAGLE MATERIALS and Heartland Financial USA, you can compare the effects of market volatilities on EAGLE MATERIALS and Heartland Financial 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 Heartland Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of EAGLE MATERIALS and Heartland Financial.
Diversification Opportunities for EAGLE MATERIALS and Heartland Financial
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between EAGLE and Heartland is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding EAGLE MATERIALS and Heartland Financial USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heartland Financial USA 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 Heartland Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heartland Financial USA has no effect on the direction of EAGLE MATERIALS i.e., EAGLE MATERIALS and Heartland Financial go up and down completely randomly.
Pair Corralation between EAGLE MATERIALS and Heartland Financial
Assuming the 90 days trading horizon EAGLE MATERIALS is expected to generate 1.58 times less return on investment than Heartland Financial. But when comparing it to its historical volatility, EAGLE MATERIALS is 1.14 times less risky than Heartland Financial. It trades about 0.1 of its potential returns per unit of risk. Heartland Financial USA is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 2,740 in Heartland Financial USA on September 14, 2024 and sell it today you would earn a total of 3,560 from holding Heartland Financial USA or generate 129.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.64% |
| Values | Daily Returns |
EAGLE MATERIALS vs. Heartland Financial USA
Performance |
| Timeline |
| EAGLE MATERIALS |
| Heartland Financial USA |
EAGLE MATERIALS and Heartland Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EAGLE MATERIALS and Heartland Financial
The main advantage of trading using opposite EAGLE MATERIALS and Heartland Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EAGLE MATERIALS position performs unexpectedly, Heartland Financial 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 Heartland Financial will offset losses from the drop in Heartland Financial's long position.| EAGLE MATERIALS vs. Apple Inc | EAGLE MATERIALS vs. Apple Inc | EAGLE MATERIALS vs. Apple Inc | EAGLE MATERIALS vs. Apple Inc |
| Heartland Financial vs. EAGLE MATERIALS | Heartland Financial vs. Heidelberg Materials AG | Heartland Financial vs. Compagnie Plastic Omnium | Heartland Financial vs. Mitsubishi Materials |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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