Correlation Between EAGLE MATERIALS and Carpenter Technology
Can any of the company-specific risk be diversified away by investing in both EAGLE MATERIALS and Carpenter Technology 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 Carpenter Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EAGLE MATERIALS and Carpenter Technology, you can compare the effects of market volatilities on EAGLE MATERIALS and Carpenter Technology 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 Carpenter Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of EAGLE MATERIALS and Carpenter Technology.
Diversification Opportunities for EAGLE MATERIALS and Carpenter Technology
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between EAGLE and Carpenter is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding EAGLE MATERIALS and Carpenter Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carpenter Technology 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 Carpenter Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carpenter Technology has no effect on the direction of EAGLE MATERIALS i.e., EAGLE MATERIALS and Carpenter Technology go up and down completely randomly.
Pair Corralation between EAGLE MATERIALS and Carpenter Technology
Assuming the 90 days trading horizon EAGLE MATERIALS is expected to under-perform the Carpenter Technology. But the stock apears to be less risky and, when comparing its historical volatility, EAGLE MATERIALS is 1.46 times less risky than Carpenter Technology. The stock trades about -0.26 of its potential returns per unit of risk. The Carpenter Technology is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 18,900 in Carpenter Technology on October 28, 2024 and sell it today you would earn a total of 1,100 from holding Carpenter Technology or generate 5.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
EAGLE MATERIALS vs. Carpenter Technology
Performance |
| Timeline |
| EAGLE MATERIALS |
| Carpenter Technology |
EAGLE MATERIALS and Carpenter Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EAGLE MATERIALS and Carpenter Technology
The main advantage of trading using opposite EAGLE MATERIALS and Carpenter Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EAGLE MATERIALS position performs unexpectedly, Carpenter Technology 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 Carpenter Technology will offset losses from the drop in Carpenter Technology's long position.| EAGLE MATERIALS vs. Charter Communications | EAGLE MATERIALS vs. GRENKELEASING Dusseldorf | EAGLE MATERIALS vs. Easy Software AG | EAGLE MATERIALS vs. UNITED RENTALS |
| Carpenter Technology vs. Allegheny Technologies Incorporated | Carpenter Technology vs. thyssenkrupp AG | Carpenter Technology vs. thyssenkrupp AG | Carpenter Technology vs. thyssenkrupp AG |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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