Correlation Between EAGLE MATERIALS and Sekisui Chemical
Can any of the company-specific risk be diversified away by investing in both EAGLE MATERIALS and Sekisui Chemical 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 Sekisui Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EAGLE MATERIALS and Sekisui Chemical Co, you can compare the effects of market volatilities on EAGLE MATERIALS and Sekisui Chemical 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 Sekisui Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of EAGLE MATERIALS and Sekisui Chemical.
Diversification Opportunities for EAGLE MATERIALS and Sekisui Chemical
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between EAGLE and Sekisui is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding EAGLE MATERIALS and Sekisui Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sekisui Chemical 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 Sekisui Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sekisui Chemical has no effect on the direction of EAGLE MATERIALS i.e., EAGLE MATERIALS and Sekisui Chemical go up and down completely randomly.
Pair Corralation between EAGLE MATERIALS and Sekisui Chemical
Assuming the 90 days trading horizon EAGLE MATERIALS is expected to generate 1.48 times less return on investment than Sekisui Chemical. In addition to that, EAGLE MATERIALS is 1.04 times more volatile than Sekisui Chemical Co. It trades about 0.14 of its total potential returns per unit of risk. Sekisui Chemical Co is currently generating about 0.21 per unit of volatility. If you would invest 1,370 in Sekisui Chemical Co on September 5, 2024 and sell it today you would earn a total of 160.00 from holding Sekisui Chemical Co or generate 11.68% 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. Sekisui Chemical Co
Performance |
| Timeline |
| EAGLE MATERIALS |
| Sekisui Chemical |
EAGLE MATERIALS and Sekisui Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EAGLE MATERIALS and Sekisui Chemical
The main advantage of trading using opposite EAGLE MATERIALS and Sekisui Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EAGLE MATERIALS position performs unexpectedly, Sekisui Chemical 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 Sekisui Chemical will offset losses from the drop in Sekisui Chemical's long position.| EAGLE MATERIALS vs. TOTAL GABON | EAGLE MATERIALS vs. Walgreens Boots Alliance | EAGLE MATERIALS vs. Peak Resources Limited |
| Sekisui Chemical vs. Martin Marietta Materials | Sekisui Chemical vs. Mitsubishi Materials | Sekisui Chemical vs. EAGLE MATERIALS | Sekisui Chemical vs. Applied 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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