Correlation Between Eagle Materials and SCANSOURCE (SC3SG)
Can any of the company-specific risk be diversified away by investing in both Eagle Materials and SCANSOURCE (SC3SG) 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 SCANSOURCE (SC3SG) into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eagle Materials and SCANSOURCE, you can compare the effects of market volatilities on Eagle Materials and SCANSOURCE (SC3SG) 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 SCANSOURCE (SC3SG). Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagle Materials and SCANSOURCE (SC3SG).
Diversification Opportunities for Eagle Materials and SCANSOURCE (SC3SG)
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Eagle and SCANSOURCE is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Materials and SCANSOURCE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCANSOURCE (SC3SG) 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 SCANSOURCE (SC3SG). Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCANSOURCE (SC3SG) has no effect on the direction of Eagle Materials i.e., Eagle Materials and SCANSOURCE (SC3SG) go up and down completely randomly.
Pair Corralation between Eagle Materials and SCANSOURCE (SC3SG)
Assuming the 90 days horizon Eagle Materials is expected to under-perform the SCANSOURCE (SC3SG). But the stock apears to be less risky and, when comparing its historical volatility, Eagle Materials is 1.25 times less risky than SCANSOURCE (SC3SG). The stock trades about -0.66 of its potential returns per unit of risk. The SCANSOURCE is currently generating about -0.33 of returns per unit of risk over similar time horizon. If you would invest 5,050 in SCANSOURCE on October 12, 2024 and sell it today you would lose (450.00) from holding SCANSOURCE or give up 8.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eagle Materials vs. SCANSOURCE
Performance |
| Timeline |
| Eagle Materials |
| SCANSOURCE (SC3SG) |
Eagle Materials and SCANSOURCE (SC3SG) Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eagle Materials and SCANSOURCE (SC3SG)
The main advantage of trading using opposite Eagle Materials and SCANSOURCE (SC3SG) positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eagle Materials position performs unexpectedly, SCANSOURCE (SC3SG) 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 SCANSOURCE (SC3SG) will offset losses from the drop in SCANSOURCE (SC3SG)'s long position.| Eagle Materials vs. SEI INVESTMENTS | Eagle Materials vs. SCIENCE IN SPORT | Eagle Materials vs. CHRYSALIS INVESTMENTS LTD | Eagle Materials vs. Keck Seng Investments |
| SCANSOURCE (SC3SG) vs. Eagle Materials | SCANSOURCE (SC3SG) vs. APPLIED MATERIALS | SCANSOURCE (SC3SG) vs. AIR PRODCHEMICALS | SCANSOURCE (SC3SG) vs. PTT Global Chemical |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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