Correlation Between EAGLE MATERIALS and Corporate Office
Can any of the company-specific risk be diversified away by investing in both EAGLE MATERIALS and Corporate Office 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 Corporate Office into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EAGLE MATERIALS and Corporate Office Properties, you can compare the effects of market volatilities on EAGLE MATERIALS and Corporate Office 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 Corporate Office. Check out your portfolio center. Please also check ongoing floating volatility patterns of EAGLE MATERIALS and Corporate Office.
Diversification Opportunities for EAGLE MATERIALS and Corporate Office
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between EAGLE and Corporate is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding EAGLE MATERIALS and Corporate Office Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corporate Office Pro 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 Corporate Office. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corporate Office Pro has no effect on the direction of EAGLE MATERIALS i.e., EAGLE MATERIALS and Corporate Office go up and down completely randomly.
Pair Corralation between EAGLE MATERIALS and Corporate Office
Assuming the 90 days trading horizon EAGLE MATERIALS is expected to generate 2.01 times more return on investment than Corporate Office. However, EAGLE MATERIALS is 2.01 times more volatile than Corporate Office Properties. It trades about 0.12 of its potential returns per unit of risk. Corporate Office Properties is currently generating about 0.23 per unit of risk. If you would invest 20,954 in EAGLE MATERIALS on September 3, 2024 and sell it today you would earn a total of 8,246 from holding EAGLE MATERIALS or generate 39.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
EAGLE MATERIALS vs. Corporate Office Properties
Performance |
| Timeline |
| EAGLE MATERIALS |
| Corporate Office Pro |
EAGLE MATERIALS and Corporate Office Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EAGLE MATERIALS and Corporate Office
The main advantage of trading using opposite EAGLE MATERIALS and Corporate Office positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EAGLE MATERIALS position performs unexpectedly, Corporate Office 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 Corporate Office will offset losses from the drop in Corporate Office's long position.| EAGLE MATERIALS vs. TOTAL GABON | EAGLE MATERIALS vs. Walgreens Boots Alliance | EAGLE MATERIALS vs. Peak Resources Limited |
| Corporate Office vs. BRIT AMER TOBACCO | Corporate Office vs. Entravision Communications | Corporate Office vs. QBE Insurance Group | Corporate Office vs. Universal Display |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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