Correlation Between Eagle Materials and FUTURE GAMING

Can any of the company-specific risk be diversified away by investing in both Eagle Materials and FUTURE GAMING 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 FUTURE GAMING into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Eagle Materials and FUTURE GAMING GRP, you can compare the effects of market volatilities on Eagle Materials and FUTURE GAMING 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 FUTURE GAMING. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagle Materials and FUTURE GAMING.

Diversification Opportunities for Eagle Materials and FUTURE GAMING

0.06

Correlation Coefficient

Eagle Materials  FUTURE GAMING

Significant diversification

The 3 months correlation between Eagle and FUTURE is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Materials and FUTURE GAMING GRP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FUTURE GAMING GRP 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 FUTURE GAMING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FUTURE GAMING GRP has no effect on the direction of Eagle Materials i.e., Eagle Materials and FUTURE GAMING go up and down completely randomly.

Pair Corralation between Eagle Materials and FUTURE GAMING

Assuming the 90 days horizon Eagle Materials is expected to generate 0.51 times more return on investment than FUTURE GAMING. However, Eagle Materials is 1.96 times less risky than FUTURE GAMING. It trades about -0.05 of its potential returns per unit of risk. FUTURE GAMING GRP is currently generating about -0.08 per unit of risk. If you would invest  25,376  in Eagle Materials on September 24, 2024 and sell it today you would lose (1,776) from holding Eagle Materials or give up 7.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Eagle Materials  vs.  FUTURE GAMING GRP

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. Despite nearly stable basic indicators, Eagle Materials is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

FUTURE GAMING GRP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FUTURE GAMING GRP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Eagle Materials and FUTURE GAMING

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

The idea behind Eagle Materials and FUTURE GAMING GRP 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.