Correlation Between Eagle Materials and SBM OFFSHORE
Can any of the company-specific risk be diversified away by investing in both Eagle Materials and SBM OFFSHORE 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 SBM OFFSHORE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eagle Materials and SBM OFFSHORE, you can compare the effects of market volatilities on Eagle Materials and SBM OFFSHORE 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 SBM OFFSHORE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagle Materials and SBM OFFSHORE.
Diversification Opportunities for Eagle Materials and SBM OFFSHORE
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Eagle and SBM is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Materials and SBM OFFSHORE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SBM OFFSHORE 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 SBM OFFSHORE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SBM OFFSHORE has no effect on the direction of Eagle Materials i.e., Eagle Materials and SBM OFFSHORE go up and down completely randomly.
Pair Corralation between Eagle Materials and SBM OFFSHORE
Assuming the 90 days horizon Eagle Materials is expected to generate 1.22 times more return on investment than SBM OFFSHORE. However, Eagle Materials is 1.22 times more volatile than SBM OFFSHORE. It trades about 0.08 of its potential returns per unit of risk. SBM OFFSHORE is currently generating about 0.06 per unit of risk. If you would invest 12,365 in Eagle Materials on November 1, 2024 and sell it today you would earn a total of 12,035 from holding Eagle Materials or generate 97.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Eagle Materials vs. SBM OFFSHORE
Performance |
| Timeline |
| Eagle Materials |
| SBM OFFSHORE |
Eagle Materials and SBM OFFSHORE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eagle Materials and SBM OFFSHORE
The main advantage of trading using opposite Eagle Materials and SBM OFFSHORE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eagle Materials position performs unexpectedly, SBM OFFSHORE 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 SBM OFFSHORE will offset losses from the drop in SBM OFFSHORE's long position.| Eagle Materials vs. VIVA WINE GROUP | Eagle Materials vs. Beta Systems Software | Eagle Materials vs. VITEC SOFTWARE GROUP | Eagle Materials vs. REGAL HOTEL INTL |
| SBM OFFSHORE vs. Sunstone Hotel Investors | SBM OFFSHORE vs. VULCAN MATERIALS | SBM OFFSHORE vs. Eagle Materials | SBM OFFSHORE vs. INTERCONT HOTELS |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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