Correlation Between AAON and Latham
Can any of the company-specific risk be diversified away by investing in both AAON and Latham 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 AAON and Latham into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AAON Inc and Latham Group, you can compare the effects of market volatilities on AAON and Latham 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 AAON with a short position of Latham. Check out your portfolio center. Please also check ongoing floating volatility patterns of AAON and Latham.
Diversification Opportunities for AAON and Latham
Good diversification
The 3 months correlation between AAON and Latham is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding AAON Inc and Latham Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Latham Group and AAON 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 AAON Inc are associated (or correlated) with Latham. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Latham Group has no effect on the direction of AAON i.e., AAON and Latham go up and down completely randomly.
Pair Corralation between AAON and Latham
Given the investment horizon of 90 days AAON is expected to generate 1.69 times less return on investment than Latham. But when comparing it to its historical volatility, AAON Inc is 2.23 times less risky than Latham. It trades about 0.14 of its potential returns per unit of risk. Latham Group is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 226.00 in Latham Group on August 26, 2024 and sell it today you would earn a total of 463.00 from holding Latham Group or generate 204.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AAON Inc vs. Latham Group
Performance |
| Timeline |
| AAON Inc |
| Latham Group |
AAON and Latham Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AAON and Latham
The main advantage of trading using opposite AAON and Latham positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AAON position performs unexpectedly, Latham 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 Latham will offset losses from the drop in Latham's long position.| AAON vs. Quanex Building Products | AAON vs. Gibraltar Industries | AAON vs. Armstrong World Industries | AAON vs. Beacon Roofing Supply |
| Latham vs. Janus International Group | Latham vs. Quanex Building Products | Latham vs. GMS Inc | Latham vs. Gibraltar Industries |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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