Correlation Between Eagle Materials and Hugo Boss

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

By analyzing existing cross correlation between Eagle Materials and Hugo Boss AG, you can compare the effects of market volatilities on Eagle Materials and Hugo Boss 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 Hugo Boss. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagle Materials and Hugo Boss.

Diversification Opportunities for Eagle Materials and Hugo Boss

-0.12

Correlation Coefficient

Eagle Materials  Hugo Boss

Good diversification

The 3 months correlation between Eagle and Hugo is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Materials and Hugo Boss AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hugo Boss 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 Hugo Boss. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hugo Boss AG has no effect on the direction of Eagle Materials i.e., Eagle Materials and Hugo Boss go up and down completely randomly.

Pair Corralation between Eagle Materials and Hugo Boss

Assuming the 90 days horizon Eagle Materials is expected to generate 3.55 times less return on investment than Hugo Boss. But when comparing it to its historical volatility, Eagle Materials is 1.67 times less risky than Hugo Boss. It trades about 0.04 of its potential returns per unit of risk. Hugo Boss AG is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  3,612  in Hugo Boss AG on September 17, 2024 and sell it today you would earn a total of  570.00  from holding Hugo Boss AG or generate 15.78% return on investment over 90 days.

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

Eagle Materials  vs.  Hugo Boss AG

Eagle Materials

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Eagle Materials are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Eagle Materials is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Hugo Boss AG

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hugo Boss AG are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Hugo Boss exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eagle Materials and Hugo Boss

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

The idea behind Eagle Materials and Hugo Boss 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.