Correlation Between Eagle Materials and Strategic Education
Can any of the company-specific risk be diversified away by investing in both Eagle Materials and Strategic 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 Strategic 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 Strategic Education, you can compare the effects of market volatilities on Eagle Materials and Strategic 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 Strategic Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagle Materials and Strategic Education.
Diversification Opportunities for Eagle Materials and Strategic Education
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Eagle and Strategic is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Materials and Strategic Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategic 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 Strategic Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strategic Education has no effect on the direction of Eagle Materials i.e., Eagle Materials and Strategic Education go up and down completely randomly.
Pair Corralation between Eagle Materials and Strategic Education
Assuming the 90 days horizon Eagle Materials is expected to generate 1.05 times less return on investment than Strategic Education. But when comparing it to its historical volatility, Eagle Materials is 1.1 times less risky than Strategic Education. It trades about 0.07 of its potential returns per unit of risk. Strategic Education is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 5,757 in Strategic Education on September 12, 2024 and sell it today you would earn a total of 3,443 from holding Strategic Education or generate 59.81% 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. Strategic Education
Performance |
| Timeline |
| Eagle Materials |
| Strategic Education |
Eagle Materials and Strategic Education Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eagle Materials and Strategic Education
The main advantage of trading using opposite Eagle Materials and Strategic Education positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eagle Materials position performs unexpectedly, Strategic 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 Strategic Education will offset losses from the drop in Strategic Education's long position.| Eagle Materials vs. Vulcan Materials | Eagle Materials vs. Heidelberg Materials AG | Eagle Materials vs. Superior Plus Corp | Eagle Materials vs. NMI Holdings |
| Strategic Education vs. IDP EDUCATION LTD | Strategic Education vs. Laureate Education | Strategic Education vs. Superior Plus Corp | Strategic Education vs. SIVERS SEMICONDUCTORS AB |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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