Correlation Between Eagle Materials and MARKET VECTR

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

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

Diversification Opportunities for Eagle Materials and MARKET VECTR

0.3

Correlation Coefficient

Eagle Materials  MARKET VECTR

Weak diversification

The 3 months correlation between Eagle and MARKET is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Materials and MARKET VECTR RETAIL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MARKET VECTR RETAIL 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 MARKET VECTR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MARKET VECTR RETAIL has no effect on the direction of Eagle Materials i.e., Eagle Materials and MARKET VECTR go up and down completely randomly.

Pair Corralation between Eagle Materials and MARKET VECTR

Assuming the 90 days horizon Eagle Materials is expected to under-perform the MARKET VECTR. In addition to that, Eagle Materials is 2.0 times more volatile than MARKET VECTR RETAIL. It trades about -0.05 of its total potential returns per unit of risk. MARKET VECTR RETAIL is currently generating about 0.18 per unit of volatility. If you would invest  19,760  in MARKET VECTR RETAIL on October 1, 2024 and sell it today you would earn a total of  1,985  from holding MARKET VECTR RETAIL or generate 10.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.16%
Values	Daily Returns

Eagle Materials  vs.  MARKET VECTR RETAIL

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 newest stock price disturbance, may contribute to mid-run losses for the stockholders.

MARKET VECTR RETAIL

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MARKET VECTR RETAIL are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, MARKET VECTR may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Eagle Materials and MARKET VECTR

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

The idea behind Eagle Materials and MARKET VECTR RETAIL 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.