Correlation Between EAGLE MATERIALS and GOLD ROAD
Can any of the company-specific risk be diversified away by investing in both EAGLE MATERIALS and GOLD ROAD 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 GOLD ROAD into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EAGLE MATERIALS and GOLD ROAD RES, you can compare the effects of market volatilities on EAGLE MATERIALS and GOLD ROAD 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 GOLD ROAD. Check out your portfolio center. Please also check ongoing floating volatility patterns of EAGLE MATERIALS and GOLD ROAD.
Diversification Opportunities for EAGLE MATERIALS and GOLD ROAD
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between EAGLE and GOLD is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding EAGLE MATERIALS and GOLD ROAD RES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GOLD ROAD RES 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 GOLD ROAD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GOLD ROAD RES has no effect on the direction of EAGLE MATERIALS i.e., EAGLE MATERIALS and GOLD ROAD go up and down completely randomly.
Pair Corralation between EAGLE MATERIALS and GOLD ROAD
Assuming the 90 days trading horizon EAGLE MATERIALS is expected to generate 1.17 times more return on investment than GOLD ROAD. However, EAGLE MATERIALS is 1.17 times more volatile than GOLD ROAD RES. It trades about 0.2 of its potential returns per unit of risk. GOLD ROAD RES is currently generating about -0.01 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 | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
EAGLE MATERIALS vs. GOLD ROAD RES
Performance |
| Timeline |
| EAGLE MATERIALS |
| GOLD ROAD RES |
EAGLE MATERIALS and GOLD ROAD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EAGLE MATERIALS and GOLD ROAD
The main advantage of trading using opposite EAGLE MATERIALS and GOLD ROAD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EAGLE MATERIALS position performs unexpectedly, GOLD ROAD 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 GOLD ROAD will offset losses from the drop in GOLD ROAD's long position.| EAGLE MATERIALS vs. Tianjin Capital Environmental | EAGLE MATERIALS vs. SOLSTAD OFFSHORE NK | EAGLE MATERIALS vs. Lion One Metals | EAGLE MATERIALS vs. LEGACY IRON ORE |
| GOLD ROAD vs. FARO Technologies | GOLD ROAD vs. REGAL ASIAN INVESTMENTS | GOLD ROAD vs. MGIC INVESTMENT | GOLD ROAD vs. THORNEY TECHS LTD |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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