Correlation Between EVS Broadcast and Eagle Materials

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

By analyzing existing cross correlation between EVS Broadcast Equipment and Eagle Materials, you can compare the effects of market volatilities on EVS Broadcast 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 EVS Broadcast with a short position of Eagle Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of EVS Broadcast and Eagle Materials.

Diversification Opportunities for EVS Broadcast and Eagle Materials

-0.48

Correlation Coefficient

EVS Broadcast  Eagle Materials

Very good diversification

The 3 months correlation between EVS and Eagle is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding EVS Broadcast Equipment and Eagle Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Materials and EVS Broadcast 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 EVS Broadcast Equipment 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 EVS Broadcast i.e., EVS Broadcast and Eagle Materials go up and down completely randomly.

Pair Corralation between EVS Broadcast and Eagle Materials

Assuming the 90 days trading horizon EVS Broadcast is expected to generate 2.15 times less return on investment than Eagle Materials. But when comparing it to its historical volatility, EVS Broadcast Equipment is 1.8 times less risky than Eagle Materials. It trades about 0.06 of its potential returns per unit of risk. Eagle Materials is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  19,761  in Eagle Materials on September 30, 2024 and sell it today you would earn a total of  4,039  from holding Eagle Materials or generate 20.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

EVS Broadcast Equipment  vs.  Eagle Materials

EVS Broadcast Equipment

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in EVS Broadcast Equipment are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, EVS Broadcast may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with EVS Broadcast and Eagle Materials

The main advantage of trading using opposite EVS Broadcast and Eagle Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EVS Broadcast 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' long position.

The idea behind EVS Broadcast Equipment and Eagle Materials 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.