Correlation Between EAGLE MATERIALS and General Dynamics
Can any of the company-specific risk be diversified away by investing in both EAGLE MATERIALS and General Dynamics 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 General Dynamics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EAGLE MATERIALS and General Dynamics, you can compare the effects of market volatilities on EAGLE MATERIALS and General Dynamics 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 General Dynamics. Check out your portfolio center. Please also check ongoing floating volatility patterns of EAGLE MATERIALS and General Dynamics.
Diversification Opportunities for EAGLE MATERIALS and General Dynamics
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between EAGLE and General is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding EAGLE MATERIALS and General Dynamics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Dynamics 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 General Dynamics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Dynamics has no effect on the direction of EAGLE MATERIALS i.e., EAGLE MATERIALS and General Dynamics go up and down completely randomly.
Pair Corralation between EAGLE MATERIALS and General Dynamics
Assuming the 90 days trading horizon EAGLE MATERIALS is expected to generate 1.18 times more return on investment than General Dynamics. However, EAGLE MATERIALS is 1.18 times more volatile than General Dynamics. It trades about 0.17 of its potential returns per unit of risk. General Dynamics is currently generating about -0.07 per unit of risk. If you would invest 26,600 in EAGLE MATERIALS on August 31, 2024 and sell it today you would earn a total of 2,400 from holding EAGLE MATERIALS or generate 9.02% 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. General Dynamics
Performance |
| Timeline |
| EAGLE MATERIALS |
| General Dynamics |
EAGLE MATERIALS and General Dynamics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EAGLE MATERIALS and General Dynamics
The main advantage of trading using opposite EAGLE MATERIALS and General Dynamics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EAGLE MATERIALS position performs unexpectedly, General Dynamics 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 General Dynamics will offset losses from the drop in General Dynamics' long position.| EAGLE MATERIALS vs. Burlington Stores | EAGLE MATERIALS vs. Ameriprise Financial | EAGLE MATERIALS vs. BJs Wholesale Club | EAGLE MATERIALS vs. National Retail Properties |
| General Dynamics vs. DICKS Sporting Goods | General Dynamics vs. Sporttotal AG | General Dynamics vs. EAGLE MATERIALS | General Dynamics vs. Summit Materials |
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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