Correlation Between EAGLE MATERIALS and CANON MARKETING
Can any of the company-specific risk be diversified away by investing in both EAGLE MATERIALS and CANON MARKETING 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 CANON MARKETING into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EAGLE MATERIALS and CANON MARKETING JP, you can compare the effects of market volatilities on EAGLE MATERIALS and CANON MARKETING 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 CANON MARKETING. Check out your portfolio center. Please also check ongoing floating volatility patterns of EAGLE MATERIALS and CANON MARKETING.
Diversification Opportunities for EAGLE MATERIALS and CANON MARKETING
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between EAGLE and CANON is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding EAGLE MATERIALS and CANON MARKETING JP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CANON MARKETING JP 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 CANON MARKETING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CANON MARKETING JP has no effect on the direction of EAGLE MATERIALS i.e., EAGLE MATERIALS and CANON MARKETING go up and down completely randomly.
Pair Corralation between EAGLE MATERIALS and CANON MARKETING
Assuming the 90 days trading horizon EAGLE MATERIALS is expected to generate 1.52 times more return on investment than CANON MARKETING. However, EAGLE MATERIALS is 1.52 times more volatile than CANON MARKETING JP. It trades about 0.16 of its potential returns per unit of risk. CANON MARKETING JP is currently generating about 0.13 per unit of risk. If you would invest 25,600 in EAGLE MATERIALS on September 3, 2024 and sell it today you would earn a total of 3,600 from holding EAGLE MATERIALS or generate 14.06% 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. CANON MARKETING JP
Performance |
| Timeline |
| EAGLE MATERIALS |
| CANON MARKETING JP |
EAGLE MATERIALS and CANON MARKETING Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EAGLE MATERIALS and CANON MARKETING
The main advantage of trading using opposite EAGLE MATERIALS and CANON MARKETING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EAGLE MATERIALS position performs unexpectedly, CANON MARKETING 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 CANON MARKETING will offset losses from the drop in CANON MARKETING's long position.| EAGLE MATERIALS vs. TOTAL GABON | EAGLE MATERIALS vs. Walgreens Boots Alliance | EAGLE MATERIALS vs. Peak Resources Limited |
| CANON MARKETING vs. TOTAL GABON | CANON MARKETING vs. Walgreens Boots Alliance | CANON MARKETING vs. Peak Resources Limited |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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