Correlation Between Eagle Materials and TRI CHEMICAL
Can any of the company-specific risk be diversified away by investing in both Eagle Materials and TRI CHEMICAL 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 TRI CHEMICAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eagle Materials and TRI CHEMICAL LABORATINC, you can compare the effects of market volatilities on Eagle Materials and TRI CHEMICAL 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 TRI CHEMICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagle Materials and TRI CHEMICAL.
Diversification Opportunities for Eagle Materials and TRI CHEMICAL
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Eagle and TRI is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Materials and TRI CHEMICAL LABORATINC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRI CHEMICAL LABORATINC 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 TRI CHEMICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRI CHEMICAL LABORATINC has no effect on the direction of Eagle Materials i.e., Eagle Materials and TRI CHEMICAL go up and down completely randomly.
Pair Corralation between Eagle Materials and TRI CHEMICAL
Assuming the 90 days horizon Eagle Materials is expected to under-perform the TRI CHEMICAL. But the stock apears to be less risky and, when comparing its historical volatility, Eagle Materials is 2.36 times less risky than TRI CHEMICAL. The stock trades about -0.73 of its potential returns per unit of risk. The TRI CHEMICAL LABORATINC is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 1,700 in TRI CHEMICAL LABORATINC on September 27, 2024 and sell it today you would lose (50.00) from holding TRI CHEMICAL LABORATINC or give up 2.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eagle Materials vs. TRI CHEMICAL LABORATINC
Performance |
| Timeline |
| Eagle Materials |
| TRI CHEMICAL LABORATINC |
Eagle Materials and TRI CHEMICAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eagle Materials and TRI CHEMICAL
The main advantage of trading using opposite Eagle Materials and TRI CHEMICAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eagle Materials position performs unexpectedly, TRI CHEMICAL 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 TRI CHEMICAL will offset losses from the drop in TRI CHEMICAL's long position.| Eagle Materials vs. Daikin IndustriesLtd | Eagle Materials vs. Vulcan Materials | Eagle Materials vs. Anhui Conch Cement | Eagle Materials vs. Martin Marietta Materials |
| TRI CHEMICAL vs. Sanyo Chemical Industries | TRI CHEMICAL vs. Eagle Materials | TRI CHEMICAL vs. Heidelberg Materials AG | TRI CHEMICAL vs. Mitsubishi Gas Chemical |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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