Correlation Between REGAL HOTEL and Eagle Materials
Can any of the company-specific risk be diversified away by investing in both REGAL HOTEL 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 REGAL HOTEL and Eagle Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between REGAL HOTEL INTL and Eagle Materials, you can compare the effects of market volatilities on REGAL HOTEL 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 REGAL HOTEL with a short position of Eagle Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of REGAL HOTEL and Eagle Materials.
Diversification Opportunities for REGAL HOTEL and Eagle Materials
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between REGAL and Eagle is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding REGAL HOTEL INTL and Eagle Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Materials and REGAL HOTEL 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 REGAL HOTEL INTL 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 REGAL HOTEL i.e., REGAL HOTEL and Eagle Materials go up and down completely randomly.
Pair Corralation between REGAL HOTEL and Eagle Materials
Assuming the 90 days trading horizon REGAL HOTEL INTL is expected to under-perform the Eagle Materials. In addition to that, REGAL HOTEL is 1.14 times more volatile than Eagle Materials. It trades about -0.08 of its total potential returns per unit of risk. Eagle Materials is currently generating about 0.19 per unit of volatility. If you would invest 22,800 in Eagle Materials on November 8, 2024 and sell it today you would earn a total of 1,400 from holding Eagle Materials or generate 6.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
REGAL HOTEL INTL vs. Eagle Materials
Performance |
| Timeline |
| REGAL HOTEL INTL |
| Eagle Materials |
REGAL HOTEL and Eagle Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with REGAL HOTEL and Eagle Materials
The main advantage of trading using opposite REGAL HOTEL and Eagle Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if REGAL HOTEL 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.| REGAL HOTEL vs. AEON METALS LTD | REGAL HOTEL vs. AIR LIQUIDE ADR | REGAL HOTEL vs. Pentair plc | REGAL HOTEL vs. PARKEN Sport Entertainment |
| Eagle Materials vs. Norwegian Air Shuttle | Eagle Materials vs. DISTRICT METALS | Eagle Materials vs. CORNISH METALS INC | Eagle Materials vs. Delta Air Lines |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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