Correlation Between EAGLE MATERIALS and Sandfire Resources
Can any of the company-specific risk be diversified away by investing in both EAGLE MATERIALS and Sandfire Resources 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 Sandfire Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EAGLE MATERIALS and Sandfire Resources Limited, you can compare the effects of market volatilities on EAGLE MATERIALS and Sandfire Resources 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 Sandfire Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of EAGLE MATERIALS and Sandfire Resources.
Diversification Opportunities for EAGLE MATERIALS and Sandfire Resources
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between EAGLE and Sandfire is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding EAGLE MATERIALS and Sandfire Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sandfire Resources 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 Sandfire Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sandfire Resources has no effect on the direction of EAGLE MATERIALS i.e., EAGLE MATERIALS and Sandfire Resources go up and down completely randomly.
Pair Corralation between EAGLE MATERIALS and Sandfire Resources
Assuming the 90 days trading horizon EAGLE MATERIALS is expected to under-perform the Sandfire Resources. But the stock apears to be less risky and, when comparing its historical volatility, EAGLE MATERIALS is 1.74 times less risky than Sandfire Resources. The stock trades about -0.81 of its potential returns per unit of risk. The Sandfire Resources Limited is currently generating about -0.23 of returns per unit of risk over similar time horizon. If you would invest 630.00 in Sandfire Resources Limited on September 26, 2024 and sell it today you would lose (70.00) from holding Sandfire Resources Limited or give up 11.11% 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. Sandfire Resources Limited
Performance |
Timeline |
EAGLE MATERIALS |
Sandfire Resources |
EAGLE MATERIALS and Sandfire Resources Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with EAGLE MATERIALS and Sandfire Resources
The main advantage of trading using opposite EAGLE MATERIALS and Sandfire Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EAGLE MATERIALS position performs unexpectedly, Sandfire Resources 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 Sandfire Resources will offset losses from the drop in Sandfire Resources' long position.EAGLE MATERIALS vs. ATRYS HEALTH SA | EAGLE MATERIALS vs. EPSILON HEALTHCARE LTD | EAGLE MATERIALS vs. STRAYER EDUCATION | EAGLE MATERIALS vs. DeVry Education Group |
Sandfire Resources vs. EBRO FOODS | Sandfire Resources vs. Astral Foods Limited | Sandfire Resources vs. MOLSON RS BEVERAGE | Sandfire Resources vs. Tyson Foods |
Check out your portfolio center.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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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