Correlation Between Eagle Materials and Xenia Hotels
Can any of the company-specific risk be diversified away by investing in both Eagle Materials and Xenia Hotels 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 Xenia Hotels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eagle Materials and Xenia Hotels Resorts, you can compare the effects of market volatilities on Eagle Materials and Xenia Hotels 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 Xenia Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagle Materials and Xenia Hotels.
Diversification Opportunities for Eagle Materials and Xenia Hotels
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Eagle and Xenia is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Materials and Xenia Hotels Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xenia Hotels Resorts 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 Xenia Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xenia Hotels Resorts has no effect on the direction of Eagle Materials i.e., Eagle Materials and Xenia Hotels go up and down completely randomly.
Pair Corralation between Eagle Materials and Xenia Hotels
Assuming the 90 days horizon Eagle Materials is expected to generate 1.2 times more return on investment than Xenia Hotels. However, Eagle Materials is 1.2 times more volatile than Xenia Hotels Resorts. It trades about 0.12 of its potential returns per unit of risk. Xenia Hotels Resorts is currently generating about 0.05 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 8,046 from holding Eagle Materials or generate 38.4% 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. Xenia Hotels Resorts
Performance |
| Timeline |
| Eagle Materials |
| Xenia Hotels Resorts |
Eagle Materials and Xenia Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eagle Materials and Xenia Hotels
The main advantage of trading using opposite Eagle Materials and Xenia Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eagle Materials position performs unexpectedly, Xenia Hotels 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 Xenia Hotels will offset losses from the drop in Xenia Hotels' long position.| Eagle Materials vs. Vulcan Materials | Eagle Materials vs. Superior Plus Corp | Eagle Materials vs. NMI Holdings | Eagle Materials vs. Origin Agritech |
| Xenia Hotels vs. Host Hotels Resorts | Xenia Hotels vs. Ryman Hospitality Properties | Xenia Hotels vs. Park Hotels Resorts | Xenia Hotels vs. Pebblebrook Hotel Trust |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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