Correlation Between Eagle Materials and SERI INDUSTRIAL
Can any of the company-specific risk be diversified away by investing in both Eagle Materials and SERI INDUSTRIAL 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 SERI INDUSTRIAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eagle Materials and SERI INDUSTRIAL EO, you can compare the effects of market volatilities on Eagle Materials and SERI INDUSTRIAL 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 SERI INDUSTRIAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagle Materials and SERI INDUSTRIAL.
Diversification Opportunities for Eagle Materials and SERI INDUSTRIAL
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Eagle and SERI is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Materials and SERI INDUSTRIAL EO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SERI INDUSTRIAL EO 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 SERI INDUSTRIAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SERI INDUSTRIAL EO has no effect on the direction of Eagle Materials i.e., Eagle Materials and SERI INDUSTRIAL go up and down completely randomly.
Pair Corralation between Eagle Materials and SERI INDUSTRIAL
Assuming the 90 days horizon Eagle Materials is expected to under-perform the SERI INDUSTRIAL. But the stock apears to be less risky and, when comparing its historical volatility, Eagle Materials is 2.75 times less risky than SERI INDUSTRIAL. The stock trades about -0.36 of its potential returns per unit of risk. The SERI INDUSTRIAL EO is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 224.00 in SERI INDUSTRIAL EO on November 28, 2024 and sell it today you would lose (7.00) from holding SERI INDUSTRIAL EO or give up 3.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Eagle Materials vs. SERI INDUSTRIAL EO
Performance |
| Timeline |
| Eagle Materials |
| SERI INDUSTRIAL EO |
Eagle Materials and SERI INDUSTRIAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eagle Materials and SERI INDUSTRIAL
The main advantage of trading using opposite Eagle Materials and SERI INDUSTRIAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eagle Materials position performs unexpectedly, SERI INDUSTRIAL 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 SERI INDUSTRIAL will offset losses from the drop in SERI INDUSTRIAL's long position.| Eagle Materials vs. PARKEN SPORT ENT | Eagle Materials vs. Transportadora de Gas | Eagle Materials vs. ANTA Sports Products | Eagle Materials vs. SPORT LISBOA E |
| SERI INDUSTRIAL vs. International Consolidated Airlines | SERI INDUSTRIAL vs. Nordic Semiconductor ASA | SERI INDUSTRIAL vs. United Airlines Holdings | SERI INDUSTRIAL vs. ON Semiconductor |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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