Correlation Between EAGLE MATERIALS and ATT
Can any of the company-specific risk be diversified away by investing in both EAGLE MATERIALS and ATT 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 ATT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EAGLE MATERIALS and ATT Inc, you can compare the effects of market volatilities on EAGLE MATERIALS and ATT 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 ATT. Check out your portfolio center. Please also check ongoing floating volatility patterns of EAGLE MATERIALS and ATT.
Diversification Opportunities for EAGLE MATERIALS and ATT
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between EAGLE and ATT is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding EAGLE MATERIALS and ATT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATT Inc 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 ATT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATT Inc has no effect on the direction of EAGLE MATERIALS i.e., EAGLE MATERIALS and ATT go up and down completely randomly.
Pair Corralation between EAGLE MATERIALS and ATT
Assuming the 90 days trading horizon EAGLE MATERIALS is expected to generate 1.15 times less return on investment than ATT. In addition to that, EAGLE MATERIALS is 1.45 times more volatile than ATT Inc. It trades about 0.09 of its total potential returns per unit of risk. ATT Inc is currently generating about 0.14 per unit of volatility. If you would invest 1,188 in ATT Inc on September 12, 2024 and sell it today you would earn a total of 1,036 from holding ATT Inc or generate 87.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
EAGLE MATERIALS vs. ATT Inc
Performance |
| Timeline |
| EAGLE MATERIALS |
| ATT Inc |
EAGLE MATERIALS and ATT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EAGLE MATERIALS and ATT
The main advantage of trading using opposite EAGLE MATERIALS and ATT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EAGLE MATERIALS position performs unexpectedly, ATT 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 ATT will offset losses from the drop in ATT's long position.| EAGLE MATERIALS vs. Apple Inc | EAGLE MATERIALS vs. Apple Inc | EAGLE MATERIALS vs. Apple Inc | EAGLE MATERIALS vs. Apple Inc |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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