Correlation Between EAGLE MATERIALS and Performance Food

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

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

Diversification Opportunities for EAGLE MATERIALS and Performance Food

-0.05

Correlation Coefficient

EAGLE MATERIALS  Performance Food

Good diversification

The 3 months correlation between EAGLE and Performance is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding EAGLE MATERIALS and Performance Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Performance Food 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 Performance Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Performance Food has no effect on the direction of EAGLE MATERIALS i.e., EAGLE MATERIALS and Performance Food go up and down completely randomly.

Pair Corralation between EAGLE MATERIALS and Performance Food

Assuming the 90 days trading horizon EAGLE MATERIALS is expected to generate 1.23 times more return on investment than Performance Food. However, EAGLE MATERIALS is 1.23 times more volatile than Performance Food Group. It trades about 0.07 of its potential returns per unit of risk. Performance Food Group is currently generating about 0.06 per unit of risk. If you would invest  13,552  in EAGLE MATERIALS on October 27, 2024 and sell it today you would earn a total of  11,248  from holding EAGLE MATERIALS or generate 83.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

EAGLE MATERIALS  vs.  Performance Food Group

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. In spite of rather sound primary indicators, EAGLE MATERIALS is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Performance Food

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Performance Food Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Performance Food may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with EAGLE MATERIALS and Performance Food

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

The idea behind EAGLE MATERIALS and Performance Food Group 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.