Correlation Between Eagle Materials and CSX

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

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

Diversification Opportunities for Eagle Materials and CSX

-0.48

Correlation Coefficient

Eagle Materials  CSX

Very good diversification

The 3 months correlation between Eagle and CSX is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Materials and CSX Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSX Corporation 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 CSX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSX Corporation has no effect on the direction of Eagle Materials i.e., Eagle Materials and CSX go up and down completely randomly.

Pair Corralation between Eagle Materials and CSX

Assuming the 90 days horizon Eagle Materials is expected to under-perform the CSX. In addition to that, Eagle Materials is 1.63 times more volatile than CSX Corporation. It trades about -0.01 of its total potential returns per unit of risk. CSX Corporation is currently generating about 0.22 per unit of volatility. If you would invest  2,425  in CSX Corporation on April 24, 2025 and sell it today you would earn a total of  560.00  from holding CSX Corporation or generate 23.09% 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.  CSX Corp.

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. 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.

CSX Corporation

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CSX Corporation are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, CSX reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eagle Materials and CSX

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

The idea behind Eagle Materials and CSX Corporation 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 AI Portfolio Prophet module to use AI to generate optimal portfolios and find profitable investment opportunities.