Correlation Between Eagle Materials and TAL Education
Can any of the company-specific risk be diversified away by investing in both Eagle Materials and TAL Education 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 TAL Education into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eagle Materials and TAL Education Group, you can compare the effects of market volatilities on Eagle Materials and TAL Education 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 TAL Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagle Materials and TAL Education.
Diversification Opportunities for Eagle Materials and TAL Education
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Eagle and TAL is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Materials and TAL Education Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TAL Education Group 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 TAL Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TAL Education Group has no effect on the direction of Eagle Materials i.e., Eagle Materials and TAL Education go up and down completely randomly.
Pair Corralation between Eagle Materials and TAL Education
Assuming the 90 days horizon Eagle Materials is expected to generate 0.61 times more return on investment than TAL Education. However, Eagle Materials is 1.65 times less risky than TAL Education. It trades about 0.26 of its potential returns per unit of risk. TAL Education Group is currently generating about -0.1 per unit of risk. If you would invest 26,600 in Eagle Materials on August 29, 2024 and sell it today you would earn a total of 3,200 from holding Eagle Materials or generate 12.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eagle Materials vs. TAL Education Group
Performance |
| Timeline |
| Eagle Materials |
| TAL Education Group |
Eagle Materials and TAL Education Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eagle Materials and TAL Education
The main advantage of trading using opposite Eagle Materials and TAL Education positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eagle Materials position performs unexpectedly, TAL Education 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 TAL Education will offset losses from the drop in TAL Education'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 |
| TAL Education vs. Apple Inc | TAL Education vs. Apple Inc | TAL Education vs. Apple Inc | TAL Education 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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