Correlation Between EAGLE MATERIALS and Burlington Stores
Can any of the company-specific risk be diversified away by investing in both EAGLE MATERIALS and Burlington 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 Burlington 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 Burlington Stores, you can compare the effects of market volatilities on EAGLE MATERIALS and Burlington 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 Burlington Stores. Check out your portfolio center. Please also check ongoing floating volatility patterns of EAGLE MATERIALS and Burlington Stores.
Diversification Opportunities for EAGLE MATERIALS and Burlington Stores
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between EAGLE and Burlington is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding EAGLE MATERIALS and Burlington Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Burlington 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 Burlington Stores. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Burlington Stores has no effect on the direction of EAGLE MATERIALS i.e., EAGLE MATERIALS and Burlington Stores go up and down completely randomly.
Pair Corralation between EAGLE MATERIALS and Burlington Stores
Assuming the 90 days trading horizon EAGLE MATERIALS is expected to generate 1.77 times less return on investment than Burlington Stores. In addition to that, EAGLE MATERIALS is 1.05 times more volatile than Burlington Stores. It trades about 0.17 of its total potential returns per unit of risk. Burlington Stores is currently generating about 0.31 per unit of volatility. If you would invest 23,400 in Burlington Stores on August 31, 2024 and sell it today you would earn a total of 4,000 from holding Burlington Stores or generate 17.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
EAGLE MATERIALS vs. Burlington Stores
Performance |
| Timeline |
| EAGLE MATERIALS |
| Burlington Stores |
EAGLE MATERIALS and Burlington Stores Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EAGLE MATERIALS and Burlington Stores
The main advantage of trading using opposite EAGLE MATERIALS and Burlington Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EAGLE MATERIALS position performs unexpectedly, Burlington 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 Burlington Stores will offset losses from the drop in Burlington Stores' long position.| EAGLE MATERIALS vs. Burlington Stores | EAGLE MATERIALS vs. Ameriprise Financial | EAGLE MATERIALS vs. BJs Wholesale Club | EAGLE MATERIALS vs. National Retail Properties |
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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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