Correlation Between EAGLE MATERIALS and Bank of America
Can any of the company-specific risk be diversified away by investing in both EAGLE MATERIALS and Bank of America 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 Bank of America into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EAGLE MATERIALS and Bank of America, you can compare the effects of market volatilities on EAGLE MATERIALS and Bank of America 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 Bank of America. Check out your portfolio center. Please also check ongoing floating volatility patterns of EAGLE MATERIALS and Bank of America.
Diversification Opportunities for EAGLE MATERIALS and Bank of America
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between EAGLE and Bank is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding EAGLE MATERIALS and Bank of America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of America 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 Bank of America. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of America has no effect on the direction of EAGLE MATERIALS i.e., EAGLE MATERIALS and Bank of America go up and down completely randomly.
Pair Corralation between EAGLE MATERIALS and Bank of America
Assuming the 90 days trading horizon EAGLE MATERIALS is expected to generate 1.8 times less return on investment than Bank of America. But when comparing it to its historical volatility, EAGLE MATERIALS is 1.01 times less risky than Bank of America. It trades about 0.19 of its potential returns per unit of risk. Bank of America is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 3,819 in Bank of America on September 3, 2024 and sell it today you would earn a total of 721.00 from holding Bank of America or generate 18.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
EAGLE MATERIALS vs. Bank of America
Performance |
| Timeline |
| EAGLE MATERIALS |
| Bank of America |
EAGLE MATERIALS and Bank of America Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EAGLE MATERIALS and Bank of America
The main advantage of trading using opposite EAGLE MATERIALS and Bank of America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EAGLE MATERIALS position performs unexpectedly, Bank of America 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 Bank of America will offset losses from the drop in Bank of America's long position.| EAGLE MATERIALS vs. TOTAL GABON | EAGLE MATERIALS vs. Walgreens Boots Alliance | EAGLE MATERIALS vs. Peak Resources Limited |
| Bank of America vs. HSBC Holdings plc | Bank of America vs. Bank of China | Bank of America vs. Commonwealth Bank of |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
Other Complementary Tools
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format |