Correlation Between Eagle Materials and Holcim
Can any of the company-specific risk be diversified away by investing in both Eagle Materials and Holcim 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 Holcim into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eagle Materials and Holcim, you can compare the effects of market volatilities on Eagle Materials and Holcim 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 Holcim. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagle Materials and Holcim.
Diversification Opportunities for Eagle Materials and Holcim
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Eagle and Holcim is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Materials and Holcim in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Holcim 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 Holcim. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Holcim has no effect on the direction of Eagle Materials i.e., Eagle Materials and Holcim go up and down completely randomly.
Pair Corralation between Eagle Materials and Holcim
Considering the 90-day investment horizon Eagle Materials is expected to generate 1.15 times more return on investment than Holcim. However, Eagle Materials is 1.15 times more volatile than Holcim. It trades about 0.1 of its potential returns per unit of risk. Holcim is currently generating about 0.11 per unit of risk. If you would invest 28,765 in Eagle Materials on August 30, 2024 and sell it today you would earn a total of 1,828 from holding Eagle Materials or generate 6.35% 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. Holcim
Performance |
| Timeline |
| Eagle Materials |
| Holcim |
Eagle Materials and Holcim Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eagle Materials and Holcim
The main advantage of trading using opposite Eagle Materials and Holcim positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eagle Materials position performs unexpectedly, Holcim 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 Holcim will offset losses from the drop in Holcim's long position.| Eagle Materials vs. Vulcan Materials | Eagle Materials vs. CRH PLC ADR | Eagle Materials vs. Summit Materials | Eagle Materials vs. Cemex SAB de |
| Holcim vs. HeidelbergCement AG ADR | Holcim vs. Anhui Conch Cement | Holcim vs. Buzzi Unicem SpA | Holcim vs. Wienerberger Baustoffindustrie |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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