Correlation Between Apogee Enterprises and BBB Foods
Can any of the company-specific risk be diversified away by investing in both Apogee Enterprises and BBB Foods 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 BBB Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apogee Enterprises and BBB Foods, you can compare the effects of market volatilities on Apogee Enterprises and BBB Foods 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 BBB Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apogee Enterprises and BBB Foods.
Diversification Opportunities for Apogee Enterprises and BBB Foods
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Apogee and BBB is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Apogee Enterprises and BBB Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BBB Foods 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 BBB Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BBB Foods has no effect on the direction of Apogee Enterprises i.e., Apogee Enterprises and BBB Foods go up and down completely randomly.
Pair Corralation between Apogee Enterprises and BBB Foods
Given the investment horizon of 90 days Apogee Enterprises is expected to generate 1.31 times less return on investment than BBB Foods. But when comparing it to its historical volatility, Apogee Enterprises is 1.48 times less risky than BBB Foods. It trades about 0.1 of its potential returns per unit of risk. BBB Foods is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,750 in BBB Foods on August 31, 2024 and sell it today you would earn a total of 1,072 from holding BBB Foods or generate 61.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 54.81% |
| Values | Daily Returns |
Apogee Enterprises vs. BBB Foods
Performance |
| Timeline |
| Apogee Enterprises |
| BBB Foods |
Apogee Enterprises and BBB Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apogee Enterprises and BBB Foods
The main advantage of trading using opposite Apogee Enterprises and BBB Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apogee Enterprises position performs unexpectedly, BBB Foods 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 BBB Foods will offset losses from the drop in BBB Foods' long position.| Apogee Enterprises vs. Quanex Building Products | Apogee Enterprises vs. Janus International Group | Apogee Enterprises vs. Interface | Apogee Enterprises vs. Azek Company |
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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