Correlation Between Eagle Materials and James Hardie
Can any of the company-specific risk be diversified away by investing in both Eagle Materials and James Hardie 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 James Hardie into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eagle Materials and James Hardie Industries, you can compare the effects of market volatilities on Eagle Materials and James Hardie 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 James Hardie. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagle Materials and James Hardie.
Diversification Opportunities for Eagle Materials and James Hardie
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Eagle and James is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Materials and James Hardie Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on James Hardie Industries 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 James Hardie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of James Hardie Industries has no effect on the direction of Eagle Materials i.e., Eagle Materials and James Hardie go up and down completely randomly.
Pair Corralation between Eagle Materials and James Hardie
Considering the 90-day investment horizon Eagle Materials is expected to generate 0.69 times more return on investment than James Hardie. However, Eagle Materials is 1.46 times less risky than James Hardie. It trades about 0.17 of its potential returns per unit of risk. James Hardie Industries is currently generating about -0.06 per unit of risk. If you would invest 28,255 in Eagle Materials on August 26, 2024 and sell it today you would earn a total of 3,180 from holding Eagle Materials or generate 11.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eagle Materials vs. James Hardie Industries
Performance |
| Timeline |
| Eagle Materials |
| James Hardie Industries |
Eagle Materials and James Hardie Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eagle Materials and James Hardie
The main advantage of trading using opposite Eagle Materials and James Hardie positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eagle Materials position performs unexpectedly, James Hardie 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 James Hardie will offset losses from the drop in James Hardie'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 |
| James Hardie vs. Holcim | James Hardie vs. Lafargeholcim Ltd ADR | James Hardie vs. Eagle Materials | James Hardie vs. The Monarch Cement |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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