Correlation Between Eagle Materials and EURASIAN MINERALS
Can any of the company-specific risk be diversified away by investing in both Eagle Materials and EURASIAN MINERALS 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 EURASIAN MINERALS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eagle Materials and EURASIAN MINERALS, you can compare the effects of market volatilities on Eagle Materials and EURASIAN MINERALS 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 EURASIAN MINERALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagle Materials and EURASIAN MINERALS.
Diversification Opportunities for Eagle Materials and EURASIAN MINERALS
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Eagle and EURASIAN is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Materials and EURASIAN MINERALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EURASIAN MINERALS 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 EURASIAN MINERALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EURASIAN MINERALS has no effect on the direction of Eagle Materials i.e., Eagle Materials and EURASIAN MINERALS go up and down completely randomly.
Pair Corralation between Eagle Materials and EURASIAN MINERALS
Assuming the 90 days horizon Eagle Materials is expected to under-perform the EURASIAN MINERALS. In addition to that, Eagle Materials is 1.43 times more volatile than EURASIAN MINERALS. It trades about -0.31 of its total potential returns per unit of risk. EURASIAN MINERALS is currently generating about -0.02 per unit of volatility. If you would invest 166.00 in EURASIAN MINERALS on September 20, 2024 and sell it today you would lose (1.00) from holding EURASIAN MINERALS or give up 0.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Eagle Materials vs. EURASIAN MINERALS
Performance |
| Timeline |
| Eagle Materials |
| EURASIAN MINERALS |
Eagle Materials and EURASIAN MINERALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eagle Materials and EURASIAN MINERALS
The main advantage of trading using opposite Eagle Materials and EURASIAN MINERALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eagle Materials position performs unexpectedly, EURASIAN MINERALS 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 EURASIAN MINERALS will offset losses from the drop in EURASIAN MINERALS's long position.| Eagle Materials vs. Heidelberg Materials AG | Eagle Materials vs. Superior Plus Corp | Eagle Materials vs. NMI Holdings | Eagle Materials vs. SIVERS SEMICONDUCTORS AB |
| EURASIAN MINERALS vs. PARKEN Sport Entertainment | EURASIAN MINERALS vs. Eagle Materials | EURASIAN MINERALS vs. Applied Materials | EURASIAN MINERALS vs. THRACE PLASTICS |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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