Correlation Between EAGLE MATERIALS and FAST RETAIL
Can any of the company-specific risk be diversified away by investing in both EAGLE MATERIALS and FAST RETAIL 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 FAST RETAIL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EAGLE MATERIALS and FAST RETAIL ADR, you can compare the effects of market volatilities on EAGLE MATERIALS and FAST RETAIL 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 FAST RETAIL. Check out your portfolio center. Please also check ongoing floating volatility patterns of EAGLE MATERIALS and FAST RETAIL.
Diversification Opportunities for EAGLE MATERIALS and FAST RETAIL
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between EAGLE and FAST is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding EAGLE MATERIALS and FAST RETAIL ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FAST RETAIL ADR 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 FAST RETAIL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FAST RETAIL ADR has no effect on the direction of EAGLE MATERIALS i.e., EAGLE MATERIALS and FAST RETAIL go up and down completely randomly.
Pair Corralation between EAGLE MATERIALS and FAST RETAIL
Assuming the 90 days trading horizon EAGLE MATERIALS is expected to generate 1.32 times more return on investment than FAST RETAIL. However, EAGLE MATERIALS is 1.32 times more volatile than FAST RETAIL ADR. It trades about 0.2 of its potential returns per unit of risk. FAST RETAIL ADR is currently generating about 0.1 per unit of risk. If you would invest 26,000 in EAGLE MATERIALS on August 30, 2024 and sell it today you would earn a total of 3,000 from holding EAGLE MATERIALS or generate 11.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
EAGLE MATERIALS vs. FAST RETAIL ADR
Performance |
| Timeline |
| EAGLE MATERIALS |
| FAST RETAIL ADR |
EAGLE MATERIALS and FAST RETAIL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EAGLE MATERIALS and FAST RETAIL
The main advantage of trading using opposite EAGLE MATERIALS and FAST RETAIL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EAGLE MATERIALS position performs unexpectedly, FAST RETAIL 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 FAST RETAIL will offset losses from the drop in FAST RETAIL's long position.| EAGLE MATERIALS vs. Sunstone Hotel Investors | EAGLE MATERIALS vs. Amkor Technology | EAGLE MATERIALS vs. Meli Hotels International | EAGLE MATERIALS vs. MHP Hotel AG |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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