Correlation Between HeidelbergCement and Eagle Materials
Can any of the company-specific risk be diversified away by investing in both HeidelbergCement and Eagle Materials 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 HeidelbergCement and Eagle Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HeidelbergCement AG and Eagle Materials, you can compare the effects of market volatilities on HeidelbergCement and Eagle Materials 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 HeidelbergCement with a short position of Eagle Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of HeidelbergCement and Eagle Materials.
Diversification Opportunities for HeidelbergCement and Eagle Materials
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between HeidelbergCement and Eagle is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding HeidelbergCement AG and Eagle Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Materials and HeidelbergCement 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 HeidelbergCement AG are associated (or correlated) with Eagle Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagle Materials has no effect on the direction of HeidelbergCement i.e., HeidelbergCement and Eagle Materials go up and down completely randomly.
Pair Corralation between HeidelbergCement and Eagle Materials
Assuming the 90 days horizon HeidelbergCement AG is expected to generate 0.85 times more return on investment than Eagle Materials. However, HeidelbergCement AG is 1.17 times less risky than Eagle Materials. It trades about 0.5 of its potential returns per unit of risk. Eagle Materials is currently generating about 0.23 per unit of risk. If you would invest 9,670 in HeidelbergCement AG on August 25, 2024 and sell it today you would earn a total of 2,190 from holding HeidelbergCement AG or generate 22.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
HeidelbergCement AG vs. Eagle Materials
Performance |
| Timeline |
| HeidelbergCement |
| Eagle Materials |
HeidelbergCement and Eagle Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HeidelbergCement and Eagle Materials
The main advantage of trading using opposite HeidelbergCement and Eagle Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HeidelbergCement position performs unexpectedly, Eagle Materials 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 Eagle Materials will offset losses from the drop in Eagle Materials' long position.| HeidelbergCement vs. Regions Financial | HeidelbergCement vs. BANKINTER ADR 2007 | HeidelbergCement vs. Chiba Bank | HeidelbergCement vs. REVO INSURANCE SPA |
| Eagle Materials vs. Compagnie de Saint Gobain | Eagle Materials vs. HeidelbergCement AG | Eagle Materials vs. Superior Plus Corp | Eagle Materials vs. NMI Holdings |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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