Correlation Between ReTo Eco and Eagle Materials
Can any of the company-specific risk be diversified away by investing in both ReTo Eco 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 ReTo Eco and Eagle Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ReTo Eco Solutions and Eagle Materials, you can compare the effects of market volatilities on ReTo Eco 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 ReTo Eco with a short position of Eagle Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of ReTo Eco and Eagle Materials.
Diversification Opportunities for ReTo Eco and Eagle Materials
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ReTo and Eagle is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding ReTo Eco Solutions and Eagle Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Materials and ReTo Eco 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 ReTo Eco Solutions 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 ReTo Eco i.e., ReTo Eco and Eagle Materials go up and down completely randomly.
Pair Corralation between ReTo Eco and Eagle Materials
Given the investment horizon of 90 days ReTo Eco Solutions is expected to under-perform the Eagle Materials. In addition to that, ReTo Eco is 2.71 times more volatile than Eagle Materials. It trades about -0.15 of its total potential returns per unit of risk. Eagle Materials is currently generating about 0.18 per unit of volatility. If you would invest 28,898 in Eagle Materials on August 23, 2024 and sell it today you would earn a total of 2,013 from holding Eagle Materials or generate 6.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ReTo Eco Solutions vs. Eagle Materials
Performance |
| Timeline |
| ReTo Eco Solutions |
| Eagle Materials |
ReTo Eco and Eagle Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ReTo Eco and Eagle Materials
The main advantage of trading using opposite ReTo Eco and Eagle Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ReTo Eco 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.| ReTo Eco vs. Martin Marietta Materials | ReTo Eco vs. Vulcan Materials | ReTo Eco vs. Summit Materials | ReTo Eco vs. United States Lime |
| Eagle Materials vs. Vulcan Materials | Eagle Materials vs. CRH PLC ADR | Eagle Materials vs. Summit Materials | Eagle Materials vs. Cemex SAB de |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
Other Complementary Tools
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Bonds Directory Find actively traded corporate debentures issued by US companies |