Correlation Between EAGLE MATERIALS and SEEK

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Can any of the company-specific risk be diversified away by investing in both EAGLE MATERIALS and SEEK 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 SEEK into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EAGLE MATERIALS and SEEK Limited, you can compare the effects of market volatilities on EAGLE MATERIALS and SEEK 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 SEEK. Check out your portfolio center. Please also check ongoing floating volatility patterns of EAGLE MATERIALS and SEEK.

Diversification Opportunities for EAGLE MATERIALS and SEEK

0.01
  Correlation Coefficient

Significant diversification

The 3 months correlation between EAGLE and SEEK is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding EAGLE MATERIALS and SEEK Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEEK Limited 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 SEEK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEEK Limited has no effect on the direction of EAGLE MATERIALS i.e., EAGLE MATERIALS and SEEK go up and down completely randomly.

Pair Corralation between EAGLE MATERIALS and SEEK

Assuming the 90 days trading horizon EAGLE MATERIALS is expected to generate 1.47 times less return on investment than SEEK. In addition to that, EAGLE MATERIALS is 1.52 times more volatile than SEEK Limited. It trades about 0.04 of its total potential returns per unit of risk. SEEK Limited is currently generating about 0.08 per unit of volatility. If you would invest  1,320  in SEEK Limited on May 21, 2025 and sell it today you would earn a total of  80.00  from holding SEEK Limited or generate 6.06% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

EAGLE MATERIALS  vs.  SEEK Limited

 Performance 
       Timeline  
EAGLE MATERIALS 

Risk-Adjusted Performance

Weak

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in EAGLE MATERIALS are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.
SEEK Limited 

Risk-Adjusted Performance

Mild

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in SEEK Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, SEEK is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

EAGLE MATERIALS and SEEK Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with EAGLE MATERIALS and SEEK

The main advantage of trading using opposite EAGLE MATERIALS and SEEK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EAGLE MATERIALS position performs unexpectedly, SEEK 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 SEEK will offset losses from the drop in SEEK's long position.
The idea behind EAGLE MATERIALS and SEEK Limited 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.
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.

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