Correlation Between EAGLE MATERIALS and Thyssenkrupp

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

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

Diversification Opportunities for EAGLE MATERIALS and Thyssenkrupp

-0.09

Correlation Coefficient

EAGLE MATERIALS  Thyssenkrupp

Good diversification

The 3 months correlation between EAGLE and Thyssenkrupp is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding EAGLE MATERIALS and thyssenkrupp AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on thyssenkrupp AG 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 Thyssenkrupp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of thyssenkrupp AG has no effect on the direction of EAGLE MATERIALS i.e., EAGLE MATERIALS and Thyssenkrupp go up and down completely randomly.

Pair Corralation between EAGLE MATERIALS and Thyssenkrupp

Assuming the 90 days trading horizon EAGLE MATERIALS is expected to under-perform the Thyssenkrupp. But the stock apears to be less risky and, when comparing its historical volatility, EAGLE MATERIALS is 1.19 times less risky than Thyssenkrupp. The stock trades about -0.73 of its potential returns per unit of risk. The thyssenkrupp AG is currently generating about -0.17 of returns per unit of risk over similar time horizon. If you would invest  412.00  in thyssenkrupp AG on October 10, 2024 and sell it today you would lose (19.00) from holding thyssenkrupp AG or give up 4.61% of portfolio value over 90 days.

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

EAGLE MATERIALS  vs.  thyssenkrupp AG

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

thyssenkrupp AG

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in thyssenkrupp AG are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Thyssenkrupp unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EAGLE MATERIALS and Thyssenkrupp

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

The idea behind EAGLE MATERIALS and thyssenkrupp AG 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.