Correlation Between Apogee Enterprises and Fortune Brands

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

Diversification Opportunities for Apogee Enterprises and Fortune Brands

ApogeeFortuneDiversified AwayApogeeFortuneDiversified Away100%
0.7
  Correlation Coefficient

Poor diversification

The 3 months correlation between Apogee and Fortune is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Apogee Enterprises and Fortune Brands Innovations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortune Brands Innov 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 Fortune Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortune Brands Innov has no effect on the direction of Apogee Enterprises i.e., Apogee Enterprises and Fortune Brands go up and down completely randomly.

Pair Corralation between Apogee Enterprises and Fortune Brands

Given the investment horizon of 90 days Apogee Enterprises is expected to under-perform the Fortune Brands. But the stock apears to be less risky and, when comparing its historical volatility, Apogee Enterprises is 1.0 times less risky than Fortune Brands. The stock trades about -0.37 of its potential returns per unit of risk. The Fortune Brands Innovations is currently generating about -0.33 of returns per unit of risk over similar time horizon. If you would invest  7,268  in Fortune Brands Innovations on November 29, 2024 and sell it today you would lose (706.00) from holding Fortune Brands Innovations or give up 9.71% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Apogee Enterprises  vs.  Fortune Brands Innovations

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -40-30-20-10010
JavaScript chart by amCharts 3.21.15APOG FBIN
       Timeline  
Apogee Enterprises 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Apogee Enterprises has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb5055606570758085
Fortune Brands Innov 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Fortune Brands Innovations has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's forward indicators remain very healthy which may send shares a bit higher in March 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb6668707274767880

Apogee Enterprises and Fortune Brands Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-5.42-4.06-2.7-1.34-0.01771.042.13.174.23 0.020.040.060.080.100.120.14
JavaScript chart by amCharts 3.21.15APOG FBIN
       Returns  

Pair Trading with Apogee Enterprises and Fortune Brands

The main advantage of trading using opposite Apogee Enterprises and Fortune Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apogee Enterprises position performs unexpectedly, Fortune Brands 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 Fortune Brands will offset losses from the drop in Fortune Brands' long position.
The idea behind Apogee Enterprises and Fortune Brands Innovations 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 Stocks Directory module to find actively traded stocks across global markets.

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