Correlation Between EAGLE MATERIALS and APPLIED MATERIALS
Can any of the company-specific risk be diversified away by investing in both EAGLE MATERIALS and APPLIED 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 EAGLE MATERIALS and APPLIED MATERIALS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EAGLE MATERIALS and APPLIED MATERIALS, you can compare the effects of market volatilities on EAGLE MATERIALS and APPLIED 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 EAGLE MATERIALS with a short position of APPLIED MATERIALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of EAGLE MATERIALS and APPLIED MATERIALS.
Diversification Opportunities for EAGLE MATERIALS and APPLIED MATERIALS
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between EAGLE and APPLIED is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding EAGLE MATERIALS and APPLIED MATERIALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APPLIED MATERIALS 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 APPLIED MATERIALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APPLIED MATERIALS has no effect on the direction of EAGLE MATERIALS i.e., EAGLE MATERIALS and APPLIED MATERIALS go up and down completely randomly.
Pair Corralation between EAGLE MATERIALS and APPLIED MATERIALS
Assuming the 90 days trading horizon EAGLE MATERIALS is expected to generate 0.96 times more return on investment than APPLIED MATERIALS. However, EAGLE MATERIALS is 1.04 times less risky than APPLIED MATERIALS. It trades about 0.2 of its potential returns per unit of risk. APPLIED MATERIALS is currently generating about -0.09 per unit of risk. If you would invest 26,600 in EAGLE MATERIALS on August 29, 2024 and sell it today you would earn a total of 3,000 from holding EAGLE MATERIALS or generate 11.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
EAGLE MATERIALS vs. APPLIED MATERIALS
Performance |
| Timeline |
| EAGLE MATERIALS |
| APPLIED MATERIALS |
EAGLE MATERIALS and APPLIED MATERIALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EAGLE MATERIALS and APPLIED MATERIALS
The main advantage of trading using opposite EAGLE MATERIALS and APPLIED MATERIALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EAGLE MATERIALS position performs unexpectedly, APPLIED 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 APPLIED MATERIALS will offset losses from the drop in APPLIED MATERIALS'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 |
| APPLIED MATERIALS vs. The Hanover Insurance | APPLIED MATERIALS vs. ZINC MEDIA GR | APPLIED MATERIALS vs. PARKEN Sport Entertainment | APPLIED MATERIALS vs. SBI Insurance Group |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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