Correlation Between Schlumberger and EAGLE MATERIALS
Can any of the company-specific risk be diversified away by investing in both Schlumberger 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 Schlumberger and EAGLE MATERIALS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Schlumberger Limited and EAGLE MATERIALS, you can compare the effects of market volatilities on Schlumberger 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 Schlumberger with a short position of EAGLE MATERIALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Schlumberger and EAGLE MATERIALS.
Diversification Opportunities for Schlumberger and EAGLE MATERIALS
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Schlumberger and EAGLE is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Schlumberger Limited and EAGLE MATERIALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EAGLE MATERIALS and Schlumberger 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 Schlumberger Limited 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 Schlumberger i.e., Schlumberger and EAGLE MATERIALS go up and down completely randomly.
Pair Corralation between Schlumberger and EAGLE MATERIALS
Assuming the 90 days horizon Schlumberger Limited is expected to under-perform the EAGLE MATERIALS. In addition to that, Schlumberger is 1.09 times more volatile than EAGLE MATERIALS. It trades about -0.01 of its total potential returns per unit of risk. EAGLE MATERIALS is currently generating about 0.09 per unit of volatility. If you would invest 12,179 in EAGLE MATERIALS on September 12, 2024 and sell it today you would earn a total of 14,421 from holding EAGLE MATERIALS or generate 118.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Schlumberger Limited vs. EAGLE MATERIALS
Performance |
| Timeline |
| Schlumberger Limited |
| EAGLE MATERIALS |
Schlumberger and EAGLE MATERIALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Schlumberger and EAGLE MATERIALS
The main advantage of trading using opposite Schlumberger and EAGLE MATERIALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Schlumberger 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's long position.| Schlumberger vs. Tenaris SA | Schlumberger vs. NOV Inc | Schlumberger vs. Superior Plus Corp | Schlumberger vs. SIVERS SEMICONDUCTORS AB |
| EAGLE MATERIALS vs. Apple Inc | EAGLE MATERIALS vs. Apple Inc | EAGLE MATERIALS vs. Apple Inc | EAGLE MATERIALS vs. Apple Inc |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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