Correlation Between Eagle Materials and Knife River
Can any of the company-specific risk be diversified away by investing in both Eagle Materials and Knife River 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 Knife River into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eagle Materials and Knife River, you can compare the effects of market volatilities on Eagle Materials and Knife River 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 Knife River. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagle Materials and Knife River.
Diversification Opportunities for Eagle Materials and Knife River
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Eagle and Knife is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Materials and Knife River in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Knife River 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 Knife River. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Knife River has no effect on the direction of Eagle Materials i.e., Eagle Materials and Knife River go up and down completely randomly.
Pair Corralation between Eagle Materials and Knife River
Considering the 90-day investment horizon Eagle Materials is expected to generate 1.32 times less return on investment than Knife River. But when comparing it to its historical volatility, Eagle Materials is 1.85 times less risky than Knife River. It trades about 0.18 of its potential returns per unit of risk. Knife River is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 9,258 in Knife River on August 23, 2024 and sell it today you would earn a total of 792.00 from holding Knife River or generate 8.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eagle Materials vs. Knife River
Performance |
| Timeline |
| Eagle Materials |
| Knife River |
Eagle Materials and Knife River Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eagle Materials and Knife River
The main advantage of trading using opposite Eagle Materials and Knife River positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eagle Materials position performs unexpectedly, Knife River 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 Knife River will offset losses from the drop in Knife River'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 |
| Knife River vs. Cemex SAB de | Knife River vs. Boise Cascad Llc | Knife River vs. CRH PLC ADR | Knife River vs. Eagle Materials |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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