Correlation Between EAGLE MATERIALS and AEON STORES
Can any of the company-specific risk be diversified away by investing in both EAGLE MATERIALS and AEON STORES 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 AEON STORES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EAGLE MATERIALS and AEON STORES, you can compare the effects of market volatilities on EAGLE MATERIALS and AEON STORES 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 AEON STORES. Check out your portfolio center. Please also check ongoing floating volatility patterns of EAGLE MATERIALS and AEON STORES.
Diversification Opportunities for EAGLE MATERIALS and AEON STORES
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between EAGLE and AEON is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding EAGLE MATERIALS and AEON STORES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AEON STORES 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 AEON STORES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AEON STORES has no effect on the direction of EAGLE MATERIALS i.e., EAGLE MATERIALS and AEON STORES go up and down completely randomly.
Pair Corralation between EAGLE MATERIALS and AEON STORES
Assuming the 90 days trading horizon EAGLE MATERIALS is expected to generate 2.87 times more return on investment than AEON STORES. However, EAGLE MATERIALS is 2.87 times more volatile than AEON STORES. It trades about 0.12 of its potential returns per unit of risk. AEON STORES is currently generating about -0.11 per unit of risk. If you would invest 16,622 in EAGLE MATERIALS on August 26, 2024 and sell it today you would earn a total of 13,178 from holding EAGLE MATERIALS or generate 79.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
EAGLE MATERIALS vs. AEON STORES
Performance |
| Timeline |
| EAGLE MATERIALS |
| AEON STORES |
EAGLE MATERIALS and AEON STORES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EAGLE MATERIALS and AEON STORES
The main advantage of trading using opposite EAGLE MATERIALS and AEON STORES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EAGLE MATERIALS position performs unexpectedly, AEON STORES 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 AEON STORES will offset losses from the drop in AEON STORES's long position.| EAGLE MATERIALS vs. Apple Inc | EAGLE MATERIALS vs. Apple Inc | EAGLE MATERIALS vs. Apple Inc | EAGLE MATERIALS vs. Apple Inc |
| AEON STORES vs. Apple Inc | AEON STORES vs. Apple Inc | AEON STORES vs. Apple Inc | AEON STORES vs. Apple Inc |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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