Correlation Between EAGLE MATERIALS and Thermo Fisher

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

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

Diversification Opportunities for EAGLE MATERIALS and Thermo Fisher

-0.38

Correlation Coefficient

EAGLE MATERIALS  Thermo Fisher

Very good diversification

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

Pair Corralation between EAGLE MATERIALS and Thermo Fisher

Assuming the 90 days trading horizon EAGLE MATERIALS is expected to under-perform the Thermo Fisher. In addition to that, EAGLE MATERIALS is 1.31 times more volatile than Thermo Fisher Scientific. It trades about -0.04 of its total potential returns per unit of risk. Thermo Fisher Scientific is currently generating about 0.03 per unit of volatility. If you would invest  52,909  in Thermo Fisher Scientific on October 23, 2024 and sell it today you would earn a total of  1,211  from holding Thermo Fisher Scientific or generate 2.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

EAGLE MATERIALS  vs.  Thermo Fisher Scientific

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 current stock price tumult, may contribute to shorter-term losses for the shareholders.

Thermo Fisher Scientific

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Thermo Fisher Scientific are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Thermo Fisher is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with EAGLE MATERIALS and Thermo Fisher

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

The idea behind EAGLE MATERIALS and Thermo Fisher Scientific 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 Commodity Directory module to find actively traded commodities issued by global exchanges.