Correlation Between EAGLE MATERIALS and CONAGRA FOODS

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

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

Diversification Opportunities for EAGLE MATERIALS and CONAGRA FOODS

0.38

Correlation Coefficient

EAGLE MATERIALS  CONAGRA FOODS

Weak diversification

The 3 months correlation between EAGLE and CONAGRA is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding EAGLE MATERIALS and CONAGRA FOODS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CONAGRA FOODS 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 CONAGRA FOODS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CONAGRA FOODS has no effect on the direction of EAGLE MATERIALS i.e., EAGLE MATERIALS and CONAGRA FOODS go up and down completely randomly.

Pair Corralation between EAGLE MATERIALS and CONAGRA FOODS

Assuming the 90 days trading horizon EAGLE MATERIALS is expected to under-perform the CONAGRA FOODS. In addition to that, EAGLE MATERIALS is 1.22 times more volatile than CONAGRA FOODS. It trades about -0.12 of its total potential returns per unit of risk. CONAGRA FOODS is currently generating about -0.07 per unit of volatility. 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

EAGLE MATERIALS  vs.  CONAGRA FOODS

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.

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.

Pair Trading with EAGLE MATERIALS and CONAGRA FOODS

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

The idea behind EAGLE MATERIALS and CONAGRA FOODS 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.