Correlation Between EAGLE MATERIALS and GOODYEAR T
Can any of the company-specific risk be diversified away by investing in both EAGLE MATERIALS and GOODYEAR T 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 GOODYEAR T into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EAGLE MATERIALS and GOODYEAR T RUBBER, you can compare the effects of market volatilities on EAGLE MATERIALS and GOODYEAR T 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 GOODYEAR T. Check out your portfolio center. Please also check ongoing floating volatility patterns of EAGLE MATERIALS and GOODYEAR T.
Diversification Opportunities for EAGLE MATERIALS and GOODYEAR T
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between EAGLE and GOODYEAR is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding EAGLE MATERIALS and GOODYEAR T RUBBER in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GOODYEAR T RUBBER 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 GOODYEAR T. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GOODYEAR T RUBBER has no effect on the direction of EAGLE MATERIALS i.e., EAGLE MATERIALS and GOODYEAR T go up and down completely randomly.
Pair Corralation between EAGLE MATERIALS and GOODYEAR T
Assuming the 90 days trading horizon EAGLE MATERIALS is expected to generate 0.67 times more return on investment than GOODYEAR T. However, EAGLE MATERIALS is 1.5 times less risky than GOODYEAR T. It trades about 0.09 of its potential returns per unit of risk. GOODYEAR T RUBBER is currently generating about 0.01 per unit of risk. If you would invest 12,365 in EAGLE MATERIALS on November 1, 2024 and sell it today you would earn a total of 12,035 from holding EAGLE MATERIALS or generate 97.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
EAGLE MATERIALS vs. GOODYEAR T RUBBER
Performance |
| Timeline |
| EAGLE MATERIALS |
| GOODYEAR T RUBBER |
EAGLE MATERIALS and GOODYEAR T Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EAGLE MATERIALS and GOODYEAR T
The main advantage of trading using opposite EAGLE MATERIALS and GOODYEAR T positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EAGLE MATERIALS position performs unexpectedly, GOODYEAR T 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 GOODYEAR T will offset losses from the drop in GOODYEAR T's long position.| EAGLE MATERIALS vs. Delta Air Lines | EAGLE MATERIALS vs. GBS Software AG | EAGLE MATERIALS vs. Altair Engineering | EAGLE MATERIALS vs. UPDATE SOFTWARE |
| GOODYEAR T vs. S E BANKEN A | GOODYEAR T vs. BANK OF CHINA | GOODYEAR T vs. Erste Group Bank | GOODYEAR T vs. DATADOT TECHNOLOGY |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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