Correlation Between Apogee Enterprises and HE Equipment
Can any of the company-specific risk be diversified away by investing in both Apogee Enterprises and HE Equipment 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 HE Equipment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apogee Enterprises and HE Equipment Services, you can compare the effects of market volatilities on Apogee Enterprises and HE Equipment 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 HE Equipment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apogee Enterprises and HE Equipment.
Diversification Opportunities for Apogee Enterprises and HE Equipment
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Apogee and HEES is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Apogee Enterprises and HE Equipment Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HE Equipment Services 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 HE Equipment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HE Equipment Services has no effect on the direction of Apogee Enterprises i.e., Apogee Enterprises and HE Equipment go up and down completely randomly.
Pair Corralation between Apogee Enterprises and HE Equipment
Given the investment horizon of 90 days Apogee Enterprises is expected to generate 0.79 times more return on investment than HE Equipment. However, Apogee Enterprises is 1.27 times less risky than HE Equipment. It trades about 0.07 of its potential returns per unit of risk. HE Equipment Services is currently generating about 0.04 per unit of risk. If you would invest 4,525 in Apogee Enterprises on September 3, 2024 and sell it today you would earn a total of 3,896 from holding Apogee Enterprises or generate 86.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apogee Enterprises vs. HE Equipment Services
Performance |
| Timeline |
| Apogee Enterprises |
| HE Equipment Services |
Apogee Enterprises and HE Equipment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apogee Enterprises and HE Equipment
The main advantage of trading using opposite Apogee Enterprises and HE Equipment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apogee Enterprises position performs unexpectedly, HE Equipment 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 HE Equipment will offset losses from the drop in HE Equipment's long position.| Apogee Enterprises vs. Quanex Building Products | Apogee Enterprises vs. Janus International Group | Apogee Enterprises vs. Interface | Apogee Enterprises vs. Azek Company |
| HE Equipment vs. GATX Corporation | HE Equipment vs. McGrath RentCorp | HE Equipment vs. Alta Equipment Group | HE Equipment vs. Ryder System |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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