Correlation Between EAGLE MATERIALS and EBRO FOODS
Can any of the company-specific risk be diversified away by investing in both EAGLE MATERIALS and EBRO FOODS 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 EBRO FOODS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EAGLE MATERIALS and EBRO FOODS, you can compare the effects of market volatilities on EAGLE MATERIALS and EBRO FOODS 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 EBRO FOODS. Check out your portfolio center. Please also check ongoing floating volatility patterns of EAGLE MATERIALS and EBRO FOODS.
Diversification Opportunities for EAGLE MATERIALS and EBRO FOODS
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between EAGLE and EBRO is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding EAGLE MATERIALS and EBRO FOODS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EBRO FOODS 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 EBRO FOODS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EBRO FOODS has no effect on the direction of EAGLE MATERIALS i.e., EAGLE MATERIALS and EBRO FOODS go up and down completely randomly.
Pair Corralation between EAGLE MATERIALS and EBRO FOODS
Assuming the 90 days trading horizon EAGLE MATERIALS is expected to generate 1.74 times more return on investment than EBRO FOODS. However, EAGLE MATERIALS is 1.74 times more volatile than EBRO FOODS. It trades about 0.13 of its potential returns per unit of risk. EBRO FOODS is currently generating about 0.03 per unit of risk. If you would invest 24,200 in EAGLE MATERIALS on October 21, 2024 and sell it today you would earn a total of 800.00 from holding EAGLE MATERIALS or generate 3.31% 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. EBRO FOODS
Performance |
| Timeline |
| EAGLE MATERIALS |
| EBRO FOODS |
EAGLE MATERIALS and EBRO FOODS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EAGLE MATERIALS and EBRO FOODS
The main advantage of trading using opposite EAGLE MATERIALS and EBRO FOODS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EAGLE MATERIALS position performs unexpectedly, EBRO FOODS 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 EBRO FOODS will offset losses from the drop in EBRO FOODS's long position.| EAGLE MATERIALS vs. MGIC INVESTMENT | EAGLE MATERIALS vs. AGNC INVESTMENT | EAGLE MATERIALS vs. CHRYSALIS INVESTMENTS LTD | EAGLE MATERIALS vs. Scottish Mortgage Investment |
| EBRO FOODS vs. QBE Insurance Group | EBRO FOODS vs. EAGLE MATERIALS | EBRO FOODS vs. Applied Materials | EBRO FOODS vs. REVO INSURANCE SPA |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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