Correlation Between EAGLE MATERIALS and SEALED AIR
Can any of the company-specific risk be diversified away by investing in both EAGLE MATERIALS and SEALED AIR 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 SEALED AIR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EAGLE MATERIALS and SEALED AIR , you can compare the effects of market volatilities on EAGLE MATERIALS and SEALED AIR 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 SEALED AIR. Check out your portfolio center. Please also check ongoing floating volatility patterns of EAGLE MATERIALS and SEALED AIR.
Diversification Opportunities for EAGLE MATERIALS and SEALED AIR
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between EAGLE and SEALED is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding EAGLE MATERIALS and SEALED AIR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEALED AIR 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 SEALED AIR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEALED AIR has no effect on the direction of EAGLE MATERIALS i.e., EAGLE MATERIALS and SEALED AIR go up and down completely randomly.
Pair Corralation between EAGLE MATERIALS and SEALED AIR
Assuming the 90 days trading horizon EAGLE MATERIALS is expected to under-perform the SEALED AIR. In addition to that, EAGLE MATERIALS is 1.25 times more volatile than SEALED AIR . It trades about -0.16 of its total potential returns per unit of risk. SEALED AIR is currently generating about -0.17 per unit of volatility. If you would invest 3,200 in SEALED AIR on December 12, 2024 and sell it today you would lose (440.00) from holding SEALED AIR or give up 13.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
EAGLE MATERIALS vs. SEALED AIR
Performance |
| Timeline |
| EAGLE MATERIALS |
| SEALED AIR |
EAGLE MATERIALS and SEALED AIR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EAGLE MATERIALS and SEALED AIR
The main advantage of trading using opposite EAGLE MATERIALS and SEALED AIR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EAGLE MATERIALS position performs unexpectedly, SEALED AIR 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 SEALED AIR will offset losses from the drop in SEALED AIR's long position.| EAGLE MATERIALS vs. REGAL ASIAN INVESTMENTS | ||
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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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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