Correlation Between EAGLE MATERIALS and Treasury Wine
Can any of the company-specific risk be diversified away by investing in both EAGLE MATERIALS and Treasury Wine 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 Treasury Wine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EAGLE MATERIALS and Treasury Wine Estates, you can compare the effects of market volatilities on EAGLE MATERIALS and Treasury Wine 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 Treasury Wine. Check out your portfolio center. Please also check ongoing floating volatility patterns of EAGLE MATERIALS and Treasury Wine.
Diversification Opportunities for EAGLE MATERIALS and Treasury Wine
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between EAGLE and Treasury is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding EAGLE MATERIALS and Treasury Wine Estates in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Treasury Wine Estates 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 Treasury Wine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Treasury Wine Estates has no effect on the direction of EAGLE MATERIALS i.e., EAGLE MATERIALS and Treasury Wine go up and down completely randomly.
Pair Corralation between EAGLE MATERIALS and Treasury Wine
Assuming the 90 days trading horizon EAGLE MATERIALS is expected to generate 1.15 times more return on investment than Treasury Wine. However, EAGLE MATERIALS is 1.15 times more volatile than Treasury Wine Estates. It trades about 0.17 of its potential returns per unit of risk. Treasury Wine Estates is currently generating about -0.17 per unit of risk. If you would invest 24,000 in EAGLE MATERIALS on October 23, 2024 and sell it today you would earn a total of 1,000.00 from holding EAGLE MATERIALS or generate 4.17% 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. Treasury Wine Estates
Performance |
| Timeline |
| EAGLE MATERIALS |
| Treasury Wine Estates |
EAGLE MATERIALS and Treasury Wine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EAGLE MATERIALS and Treasury Wine
The main advantage of trading using opposite EAGLE MATERIALS and Treasury Wine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EAGLE MATERIALS position performs unexpectedly, Treasury Wine 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 Treasury Wine will offset losses from the drop in Treasury Wine's long position.| EAGLE MATERIALS vs. American Airlines Group | EAGLE MATERIALS vs. Southwest Airlines Co | EAGLE MATERIALS vs. VITEC SOFTWARE GROUP | EAGLE MATERIALS vs. FORMPIPE SOFTWARE AB |
| Treasury Wine vs. Sunny Optical Technology | Treasury Wine vs. Haier Smart Home | Treasury Wine vs. Easy Software AG | Treasury Wine vs. BEAZER HOMES USA |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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