Correlation Between EAGLE MATERIALS and Johnson Controls
Can any of the company-specific risk be diversified away by investing in both EAGLE MATERIALS and Johnson Controls 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 Johnson Controls into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EAGLE MATERIALS and Johnson Controls International, you can compare the effects of market volatilities on EAGLE MATERIALS and Johnson Controls 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 Johnson Controls. Check out your portfolio center. Please also check ongoing floating volatility patterns of EAGLE MATERIALS and Johnson Controls.
Diversification Opportunities for EAGLE MATERIALS and Johnson Controls
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between EAGLE and Johnson is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding EAGLE MATERIALS and Johnson Controls International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johnson Controls Int 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 Johnson Controls. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Johnson Controls Int has no effect on the direction of EAGLE MATERIALS i.e., EAGLE MATERIALS and Johnson Controls go up and down completely randomly.
Pair Corralation between EAGLE MATERIALS and Johnson Controls
Assuming the 90 days trading horizon EAGLE MATERIALS is expected to generate 1.06 times more return on investment than Johnson Controls. However, EAGLE MATERIALS is 1.06 times more volatile than Johnson Controls International. It trades about 0.1 of its potential returns per unit of risk. Johnson Controls International is currently generating about 0.04 per unit of risk. If you would invest 12,749 in EAGLE MATERIALS on August 29, 2024 and sell it today you would earn a total of 16,851 from holding EAGLE MATERIALS or generate 132.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
EAGLE MATERIALS vs. Johnson Controls International
Performance |
| Timeline |
| EAGLE MATERIALS |
| Johnson Controls Int |
EAGLE MATERIALS and Johnson Controls Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EAGLE MATERIALS and Johnson Controls
The main advantage of trading using opposite EAGLE MATERIALS and Johnson Controls positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EAGLE MATERIALS position performs unexpectedly, Johnson Controls 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 Johnson Controls will offset losses from the drop in Johnson Controls' long position.| EAGLE MATERIALS vs. Tianjin Capital Environmental | EAGLE MATERIALS vs. SOLSTAD OFFSHORE NK | EAGLE MATERIALS vs. Lion One Metals | EAGLE MATERIALS vs. LEGACY IRON ORE |
| Johnson Controls vs. Superior Plus Corp | Johnson Controls vs. NMI Holdings | Johnson Controls vs. Origin Agritech | Johnson Controls vs. SIVERS SEMICONDUCTORS AB |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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