Correlation Between Eagle Materials and BE Semiconductor
Can any of the company-specific risk be diversified away by investing in both Eagle Materials and BE Semiconductor 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 BE Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eagle Materials and BE Semiconductor Industries, you can compare the effects of market volatilities on Eagle Materials and BE Semiconductor 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 BE Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagle Materials and BE Semiconductor.
Diversification Opportunities for Eagle Materials and BE Semiconductor
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Eagle and BSI is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Materials and BE Semiconductor Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BE Semiconductor Ind 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 BE Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BE Semiconductor Ind has no effect on the direction of Eagle Materials i.e., Eagle Materials and BE Semiconductor go up and down completely randomly.
Pair Corralation between Eagle Materials and BE Semiconductor
Assuming the 90 days horizon Eagle Materials is expected to generate 0.74 times more return on investment than BE Semiconductor. However, Eagle Materials is 1.36 times less risky than BE Semiconductor. It trades about 0.21 of its potential returns per unit of risk. BE Semiconductor Industries is currently generating about 0.13 per unit of risk. If you would invest 26,400 in Eagle Materials on August 31, 2024 and sell it today you would earn a total of 2,400 from holding Eagle Materials or generate 9.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Eagle Materials vs. BE Semiconductor Industries
Performance |
| Timeline |
| Eagle Materials |
| BE Semiconductor Ind |
Eagle Materials and BE Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eagle Materials and BE Semiconductor
The main advantage of trading using opposite Eagle Materials and BE Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eagle Materials position performs unexpectedly, BE Semiconductor 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 BE Semiconductor will offset losses from the drop in BE Semiconductor's long position.| Eagle Materials vs. Superior Plus Corp | Eagle Materials vs. NMI Holdings | Eagle Materials vs. Origin Agritech | Eagle Materials vs. SIVERS SEMICONDUCTORS AB |
| BE Semiconductor vs. Apple Inc | BE Semiconductor vs. Apple Inc | BE Semiconductor vs. Apple Inc | BE Semiconductor vs. Apple Inc |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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