Correlation Between EAGLE MATERIALS and ZINC MEDIA
Can any of the company-specific risk be diversified away by investing in both EAGLE MATERIALS and ZINC MEDIA 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 ZINC MEDIA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EAGLE MATERIALS and ZINC MEDIA GR, you can compare the effects of market volatilities on EAGLE MATERIALS and ZINC MEDIA 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 ZINC MEDIA. Check out your portfolio center. Please also check ongoing floating volatility patterns of EAGLE MATERIALS and ZINC MEDIA.
Diversification Opportunities for EAGLE MATERIALS and ZINC MEDIA
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between EAGLE and ZINC is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding EAGLE MATERIALS and ZINC MEDIA GR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZINC MEDIA GR 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 ZINC MEDIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZINC MEDIA GR has no effect on the direction of EAGLE MATERIALS i.e., EAGLE MATERIALS and ZINC MEDIA go up and down completely randomly.
Pair Corralation between EAGLE MATERIALS and ZINC MEDIA
Assuming the 90 days trading horizon EAGLE MATERIALS is expected to generate 0.81 times more return on investment than ZINC MEDIA. However, EAGLE MATERIALS is 1.24 times less risky than ZINC MEDIA. It trades about -0.03 of its potential returns per unit of risk. ZINC MEDIA GR is currently generating about -0.17 per unit of risk. If you would invest 25,376 in EAGLE MATERIALS on September 24, 2024 and sell it today you would lose (1,176) from holding EAGLE MATERIALS or give up 4.63% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
EAGLE MATERIALS vs. ZINC MEDIA GR
Performance |
Timeline |
EAGLE MATERIALS |
ZINC MEDIA GR |
EAGLE MATERIALS and ZINC MEDIA Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with EAGLE MATERIALS and ZINC MEDIA
The main advantage of trading using opposite EAGLE MATERIALS and ZINC MEDIA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EAGLE MATERIALS position performs unexpectedly, ZINC MEDIA 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 ZINC MEDIA will offset losses from the drop in ZINC MEDIA's long position.EAGLE MATERIALS vs. Apple Inc | EAGLE MATERIALS vs. Apple Inc | EAGLE MATERIALS vs. Apple Inc | EAGLE MATERIALS vs. Microsoft |
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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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