Correlation Between CONAGRA FOODS and EAGLE MATERIALS

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

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

Diversification Opportunities for CONAGRA FOODS and EAGLE MATERIALS

0.38

Correlation Coefficient

CONAGRA FOODS  EAGLE MATERIALS

Weak diversification

The 3 months correlation between CONAGRA and EAGLE is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding CONAGRA FOODS and EAGLE MATERIALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EAGLE MATERIALS and CONAGRA FOODS 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 CONAGRA FOODS 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 CONAGRA FOODS i.e., CONAGRA FOODS and EAGLE MATERIALS go up and down completely randomly.

Pair Corralation between CONAGRA FOODS and EAGLE MATERIALS

Assuming the 90 days trading horizon CONAGRA FOODS is expected to generate 0.82 times more return on investment than EAGLE MATERIALS. However, CONAGRA FOODS is 1.22 times less risky than EAGLE MATERIALS. It trades about -0.07 of its potential returns per unit of risk. EAGLE MATERIALS is currently generating about -0.12 per unit of risk. If you would invest  2,598  in CONAGRA FOODS on December 21, 2024 and sell it today you would lose (212.00) from holding CONAGRA FOODS or give up 8.16% of portfolio value over 90 days.

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

CONAGRA FOODS  vs.  EAGLE MATERIALS

CONAGRA FOODS

Risk-Adjusted Performance

Very Weak

Over the last 90 days CONAGRA FOODS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

EAGLE MATERIALS

Risk-Adjusted Performance

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 unsteady performance in the last few months, the Stock's primary indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with CONAGRA FOODS and EAGLE MATERIALS

The main advantage of trading using opposite CONAGRA FOODS and EAGLE MATERIALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CONAGRA FOODS 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's long position.

The idea behind CONAGRA FOODS 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.