Correlation Between Apogee Enterprises and Azek
Can any of the company-specific risk be diversified away by investing in both Apogee Enterprises and Azek 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 Apogee Enterprises and Azek into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apogee Enterprises and Azek Company, you can compare the effects of market volatilities on Apogee Enterprises and Azek 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 Apogee Enterprises with a short position of Azek. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apogee Enterprises and Azek.
Diversification Opportunities for Apogee Enterprises and Azek
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Apogee and Azek is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Apogee Enterprises and Azek Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Azek Company and Apogee Enterprises 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 Apogee Enterprises are associated (or correlated) with Azek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Azek Company has no effect on the direction of Apogee Enterprises i.e., Apogee Enterprises and Azek go up and down completely randomly.
Pair Corralation between Apogee Enterprises and Azek
Given the investment horizon of 90 days Apogee Enterprises is expected to generate 1.18 times more return on investment than Azek. However, Apogee Enterprises is 1.18 times more volatile than Azek Company. It trades about 0.09 of its potential returns per unit of risk. Azek Company is currently generating about 0.03 per unit of risk. If you would invest 5,657 in Apogee Enterprises on August 27, 2024 and sell it today you would earn a total of 2,665 from holding Apogee Enterprises or generate 47.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apogee Enterprises vs. Azek Company
Performance |
| Timeline |
| Apogee Enterprises |
| Azek Company |
Apogee Enterprises and Azek Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apogee Enterprises and Azek
The main advantage of trading using opposite Apogee Enterprises and Azek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apogee Enterprises position performs unexpectedly, Azek 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 Azek will offset losses from the drop in Azek's long position.| Apogee Enterprises vs. Trex Company | Apogee Enterprises vs. Gibraltar Industries | Apogee Enterprises vs. Travis Perkins PLC | Apogee Enterprises vs. Janus International Group |
| Azek vs. Trex Company | Azek vs. Gibraltar Industries | Azek vs. Travis Perkins PLC | Azek vs. Janus International Group |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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