Correlation Between EAGLE MATERIALS and WHIRLPOOL
Can any of the company-specific risk be diversified away by investing in both EAGLE MATERIALS and WHIRLPOOL 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 WHIRLPOOL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EAGLE MATERIALS and WHIRLPOOL, you can compare the effects of market volatilities on EAGLE MATERIALS and WHIRLPOOL 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 WHIRLPOOL. Check out your portfolio center. Please also check ongoing floating volatility patterns of EAGLE MATERIALS and WHIRLPOOL.
Diversification Opportunities for EAGLE MATERIALS and WHIRLPOOL
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between EAGLE and WHIRLPOOL is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding EAGLE MATERIALS and WHIRLPOOL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WHIRLPOOL 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 WHIRLPOOL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WHIRLPOOL has no effect on the direction of EAGLE MATERIALS i.e., EAGLE MATERIALS and WHIRLPOOL go up and down completely randomly.
Pair Corralation between EAGLE MATERIALS and WHIRLPOOL
Assuming the 90 days trading horizon EAGLE MATERIALS is expected to under-perform the WHIRLPOOL. But the stock apears to be less risky and, when comparing its historical volatility, EAGLE MATERIALS is 1.91 times less risky than WHIRLPOOL. The stock trades about -0.28 of its potential returns per unit of risk. The WHIRLPOOL is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 10,384 in WHIRLPOOL on September 12, 2024 and sell it today you would earn a total of 1,421 from holding WHIRLPOOL or generate 13.68% 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. WHIRLPOOL
Performance |
| Timeline |
| EAGLE MATERIALS |
| WHIRLPOOL |
EAGLE MATERIALS and WHIRLPOOL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EAGLE MATERIALS and WHIRLPOOL
The main advantage of trading using opposite EAGLE MATERIALS and WHIRLPOOL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EAGLE MATERIALS position performs unexpectedly, WHIRLPOOL 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 WHIRLPOOL will offset losses from the drop in WHIRLPOOL's long position.| EAGLE MATERIALS vs. Apple Inc | EAGLE MATERIALS vs. Apple Inc | EAGLE MATERIALS vs. Apple Inc | EAGLE MATERIALS vs. Apple Inc |
| WHIRLPOOL vs. BE Semiconductor Industries | WHIRLPOOL vs. Taiwan Semiconductor Manufacturing | WHIRLPOOL vs. Heidelberg Materials AG | WHIRLPOOL vs. EAGLE 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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