Correlation Between EAGLE MATERIALS and TTM Technologies

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Can any of the company-specific risk be diversified away by investing in both EAGLE MATERIALS and TTM Technologies 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 TTM Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EAGLE MATERIALS and TTM Technologies, you can compare the effects of market volatilities on EAGLE MATERIALS and TTM Technologies 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 TTM Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of EAGLE MATERIALS and TTM Technologies.

Diversification Opportunities for EAGLE MATERIALS and TTM Technologies

EAGLETTMDiversified AwayEAGLETTMDiversified Away100%
0.81
  Correlation Coefficient

Very poor diversification

The 3 months correlation between EAGLE and TTM is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding EAGLE MATERIALS and TTM Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TTM Technologies 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 TTM Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TTM Technologies has no effect on the direction of EAGLE MATERIALS i.e., EAGLE MATERIALS and TTM Technologies go up and down completely randomly.

Pair Corralation between EAGLE MATERIALS and TTM Technologies

Assuming the 90 days trading horizon EAGLE MATERIALS is expected to generate 1.41 times less return on investment than TTM Technologies. But when comparing it to its historical volatility, EAGLE MATERIALS is 1.16 times less risky than TTM Technologies. It trades about 0.08 of its potential returns per unit of risk. TTM Technologies is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,400  in TTM Technologies on September 14, 2024 and sell it today you would earn a total of  960.00  from holding TTM Technologies or generate 68.57% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

EAGLE MATERIALS  vs.  TTM Technologies

 Performance 
JavaScript chart by amCharts 3.21.15OctNov 010203040
JavaScript chart by amCharts 3.21.15E5M TT1
       Timeline  
EAGLE MATERIALS 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in EAGLE MATERIALS are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain primary indicators, EAGLE MATERIALS may actually be approaching a critical reversion point that can send shares even higher in January 2025.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec260270280290300
TTM Technologies 

Risk-Adjusted Performance

19 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in TTM Technologies are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, TTM Technologies reported solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec1617181920212223

EAGLE MATERIALS and TTM Technologies Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-5.85-4.38-2.91-1.450.01.473.014.566.117.65 0.020.040.060.080.10
JavaScript chart by amCharts 3.21.15E5M TT1
       Returns  

Pair Trading with EAGLE MATERIALS and TTM Technologies

The main advantage of trading using opposite EAGLE MATERIALS and TTM Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EAGLE MATERIALS position performs unexpectedly, TTM Technologies 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 TTM Technologies will offset losses from the drop in TTM Technologies' long position.
The idea behind EAGLE MATERIALS and TTM Technologies pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.

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