Correlation Between Eagle Materials and DFS Furniture

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

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

Diversification Opportunities for Eagle Materials and DFS Furniture

-0.58

Correlation Coefficient

Eagle Materials  DFS Furniture

Excellent diversification

The 3 months correlation between Eagle and DFS is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Materials and DFS Furniture PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DFS Furniture PLC 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 DFS Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DFS Furniture PLC has no effect on the direction of Eagle Materials i.e., Eagle Materials and DFS Furniture go up and down completely randomly.

Pair Corralation between Eagle Materials and DFS Furniture

Assuming the 90 days horizon Eagle Materials is expected to generate 1.23 times more return on investment than DFS Furniture. However, Eagle Materials is 1.23 times more volatile than DFS Furniture PLC. It trades about 0.01 of its potential returns per unit of risk. DFS Furniture PLC is currently generating about -0.14 per unit of risk. If you would invest  19,779  in Eagle Materials on June 30, 2025 and sell it today you would earn a total of  21.00  from holding Eagle Materials or generate 0.11% return on investment over 90 days.

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

Eagle Materials  vs.  DFS Furniture PLC

Eagle Materials

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Eagle Materials are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Eagle Materials reported solid returns over the last few months and may actually be approaching a breakup point.

DFS Furniture PLC

Risk-Adjusted Performance

Weakest

Over the last 90 days DFS Furniture PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Eagle Materials and DFS Furniture

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

The idea behind Eagle Materials and DFS Furniture PLC 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.