Correlation Between EAGLE MATERIALS and Corporate Office

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

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

Diversification Opportunities for EAGLE MATERIALS and Corporate Office

0.84

Correlation Coefficient

EAGLE MATERIALS  Corporate Office

Very poor diversification

The 3 months correlation between EAGLE and Corporate is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding EAGLE MATERIALS and Corporate Office Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corporate Office Pro 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 Corporate Office. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corporate Office Pro has no effect on the direction of EAGLE MATERIALS i.e., EAGLE MATERIALS and Corporate Office go up and down completely randomly.

Pair Corralation between EAGLE MATERIALS and Corporate Office

Assuming the 90 days trading horizon EAGLE MATERIALS is expected to under-perform the Corporate Office. In addition to that, EAGLE MATERIALS is 1.63 times more volatile than Corporate Office Properties. It trades about -0.1 of its total potential returns per unit of risk. Corporate Office Properties is currently generating about -0.16 per unit of volatility. If you would invest  2,911  in Corporate Office Properties on December 30, 2024 and sell it today you would lose (411.00) from holding Corporate Office Properties or give up 14.12% of portfolio value over 90 days.

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

EAGLE MATERIALS  vs.  Corporate Office Properties

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.

Corporate Office Pro

Risk-Adjusted Performance

Very Weak

Over the last 90 days Corporate Office Properties has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with EAGLE MATERIALS and Corporate Office

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

The idea behind EAGLE MATERIALS and Corporate Office Properties 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.