Correlation Between EAGLE MATERIALS and Huntington Bancshares

Can any of the company-specific risk be diversified away by investing in both EAGLE MATERIALS and Huntington Bancshares 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 EAGLE MATERIALS and Huntington Bancshares into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between EAGLE MATERIALS and Huntington Bancshares Incorporated, you can compare the effects of market volatilities on EAGLE MATERIALS and Huntington Bancshares 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 EAGLE MATERIALS with a short position of Huntington Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of EAGLE MATERIALS and Huntington Bancshares.

Diversification Opportunities for EAGLE MATERIALS and Huntington Bancshares

0.69

Correlation Coefficient

EAGLE MATERIALS  Huntington Bancshares

Poor diversification

The 3 months correlation between EAGLE and Huntington is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding EAGLE MATERIALS and Huntington Bancshares Incorpor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huntington Bancshares and EAGLE MATERIALS 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 EAGLE MATERIALS are associated (or correlated) with Huntington Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huntington Bancshares has no effect on the direction of EAGLE MATERIALS i.e., EAGLE MATERIALS and Huntington Bancshares go up and down completely randomly.

Pair Corralation between EAGLE MATERIALS and Huntington Bancshares

Assuming the 90 days trading horizon EAGLE MATERIALS is expected to under-perform the Huntington Bancshares. But the stock apears to be less risky and, when comparing its historical volatility, EAGLE MATERIALS is 1.0 times less risky than Huntington Bancshares. The stock trades about 0.0 of its potential returns per unit of risk. The Huntington Bancshares Incorporated is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  1,330  in Huntington Bancshares Incorporated on September 20, 2024 and sell it today you would earn a total of  301.00  from holding Huntington Bancshares Incorporated or generate 22.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

EAGLE MATERIALS  vs.  Huntington Bancshares Incorpor

EAGLE MATERIALS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EAGLE MATERIALS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, EAGLE MATERIALS is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Huntington Bancshares

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Huntington Bancshares Incorporated are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Huntington Bancshares reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EAGLE MATERIALS and Huntington Bancshares

The main advantage of trading using opposite EAGLE MATERIALS and Huntington Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EAGLE MATERIALS position performs unexpectedly, Huntington Bancshares 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 Huntington Bancshares will offset losses from the drop in Huntington Bancshares' long position.

The idea behind EAGLE MATERIALS and Huntington Bancshares Incorporated pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.