Correlation Between Perma-Fix Environmental and Eagle Materials
Can any of the company-specific risk be diversified away by investing in both Perma-Fix Environmental 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 Perma-Fix Environmental and Eagle Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Perma Fix Environmental Services and Eagle Materials, you can compare the effects of market volatilities on Perma-Fix Environmental 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 Perma-Fix Environmental with a short position of Eagle Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Perma-Fix Environmental and Eagle Materials.
Diversification Opportunities for Perma-Fix Environmental and Eagle Materials
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Perma-Fix and Eagle is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Perma Fix Environmental Servic and Eagle Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Materials and Perma-Fix Environmental 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 Perma Fix Environmental Services 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 Perma-Fix Environmental i.e., Perma-Fix Environmental and Eagle Materials go up and down completely randomly.
Pair Corralation between Perma-Fix Environmental and Eagle Materials
Assuming the 90 days trading horizon Perma-Fix Environmental is expected to generate 2.58 times less return on investment than Eagle Materials. In addition to that, Perma-Fix Environmental is 2.57 times more volatile than Eagle Materials. It trades about 0.04 of its total potential returns per unit of risk. Eagle Materials is currently generating about 0.25 per unit of volatility. If you would invest 26,000 in Eagle Materials on September 1, 2024 and sell it today you would earn a total of 2,800 from holding Eagle Materials or generate 10.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Perma Fix Environmental Servic vs. Eagle Materials
Performance |
| Timeline |
| Perma Fix Environmental |
| Eagle Materials |
Perma-Fix Environmental and Eagle Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Perma-Fix Environmental and Eagle Materials
The main advantage of trading using opposite Perma-Fix Environmental and Eagle Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Perma-Fix Environmental 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.| Perma-Fix Environmental vs. Veolia Environnement SA | Perma-Fix Environmental vs. GFL ENVIRONM | Perma-Fix Environmental vs. Superior Plus Corp | Perma-Fix Environmental vs. NMI Holdings |
| Eagle Materials vs. AUST AGRICULTURAL | Eagle Materials vs. Daito Trust Construction | Eagle Materials vs. Granite Construction | Eagle Materials vs. ePlay Digital |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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