Correlation Between EAGLE MATERIALS and FUYO GENERAL
Can any of the company-specific risk be diversified away by investing in both EAGLE MATERIALS and FUYO GENERAL 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 FUYO GENERAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EAGLE MATERIALS and FUYO GENERAL LEASE, you can compare the effects of market volatilities on EAGLE MATERIALS and FUYO GENERAL 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 FUYO GENERAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of EAGLE MATERIALS and FUYO GENERAL.
Diversification Opportunities for EAGLE MATERIALS and FUYO GENERAL
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between EAGLE and FUYO is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding EAGLE MATERIALS and FUYO GENERAL LEASE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FUYO GENERAL LEASE 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 FUYO GENERAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FUYO GENERAL LEASE has no effect on the direction of EAGLE MATERIALS i.e., EAGLE MATERIALS and FUYO GENERAL go up and down completely randomly.
Pair Corralation between EAGLE MATERIALS and FUYO GENERAL
Assuming the 90 days trading horizon EAGLE MATERIALS is expected to generate 1.26 times more return on investment than FUYO GENERAL. However, EAGLE MATERIALS is 1.26 times more volatile than FUYO GENERAL LEASE. It trades about 0.1 of its potential returns per unit of risk. FUYO GENERAL LEASE is currently generating about 0.01 per unit of risk. If you would invest 15,279 in EAGLE MATERIALS on August 31, 2024 and sell it today you would earn a total of 13,921 from holding EAGLE MATERIALS or generate 91.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
EAGLE MATERIALS vs. FUYO GENERAL LEASE
Performance |
| Timeline |
| EAGLE MATERIALS |
| FUYO GENERAL LEASE |
EAGLE MATERIALS and FUYO GENERAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EAGLE MATERIALS and FUYO GENERAL
The main advantage of trading using opposite EAGLE MATERIALS and FUYO GENERAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EAGLE MATERIALS position performs unexpectedly, FUYO GENERAL 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 FUYO GENERAL will offset losses from the drop in FUYO GENERAL's long position.| EAGLE MATERIALS vs. Burlington Stores | EAGLE MATERIALS vs. Ameriprise Financial | EAGLE MATERIALS vs. BJs Wholesale Club | EAGLE MATERIALS vs. National Retail Properties |
| FUYO GENERAL vs. United Rentals | FUYO GENERAL vs. Superior Plus Corp | FUYO GENERAL vs. NMI Holdings | FUYO GENERAL vs. Origin Agritech |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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