Correlation Between Eagle Materials and Grand Canyon
Can any of the company-specific risk be diversified away by investing in both Eagle Materials and Grand Canyon 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 Grand Canyon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eagle Materials and Grand Canyon Education, you can compare the effects of market volatilities on Eagle Materials and Grand Canyon 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 Grand Canyon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagle Materials and Grand Canyon.
Diversification Opportunities for Eagle Materials and Grand Canyon
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Eagle and Grand is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Materials and Grand Canyon Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grand Canyon Education 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 Grand Canyon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grand Canyon Education has no effect on the direction of Eagle Materials i.e., Eagle Materials and Grand Canyon go up and down completely randomly.
Pair Corralation between Eagle Materials and Grand Canyon
Assuming the 90 days horizon Eagle Materials is expected to generate 2.19 times less return on investment than Grand Canyon. But when comparing it to its historical volatility, Eagle Materials is 1.79 times less risky than Grand Canyon. It trades about 0.26 of its potential returns per unit of risk. Grand Canyon Education is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 12,300 in Grand Canyon Education on August 29, 2024 and sell it today you would earn a total of 3,400 from holding Grand Canyon Education or generate 27.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eagle Materials vs. Grand Canyon Education
Performance |
| Timeline |
| Eagle Materials |
| Grand Canyon Education |
Eagle Materials and Grand Canyon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eagle Materials and Grand Canyon
The main advantage of trading using opposite Eagle Materials and Grand Canyon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eagle Materials position performs unexpectedly, Grand Canyon 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 Grand Canyon will offset losses from the drop in Grand Canyon'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 |
| Grand Canyon vs. Apple Inc | Grand Canyon vs. Apple Inc | Grand Canyon vs. Apple Inc | Grand Canyon 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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