Correlation Between Aspen Aerogels and Trex
Can any of the company-specific risk be diversified away by investing in both Aspen Aerogels and Trex 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 Aspen Aerogels and Trex into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aspen Aerogels and Trex Company, you can compare the effects of market volatilities on Aspen Aerogels and Trex 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 Aspen Aerogels with a short position of Trex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aspen Aerogels and Trex.
Diversification Opportunities for Aspen Aerogels and Trex
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Aspen and Trex is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Aspen Aerogels and Trex Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trex Company and Aspen Aerogels 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 Aspen Aerogels are associated (or correlated) with Trex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trex Company has no effect on the direction of Aspen Aerogels i.e., Aspen Aerogels and Trex go up and down completely randomly.
Pair Corralation between Aspen Aerogels and Trex
Given the investment horizon of 90 days Aspen Aerogels is expected to generate 2.31 times more return on investment than Trex. However, Aspen Aerogels is 2.31 times more volatile than Trex Company. It trades about 0.01 of its potential returns per unit of risk. Trex Company is currently generating about -0.03 per unit of risk. If you would invest 1,718 in Aspen Aerogels on August 27, 2024 and sell it today you would lose (287.00) from holding Aspen Aerogels or give up 16.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aspen Aerogels vs. Trex Company
Performance |
| Timeline |
| Aspen Aerogels |
| Trex Company |
Aspen Aerogels and Trex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aspen Aerogels and Trex
The main advantage of trading using opposite Aspen Aerogels and Trex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aspen Aerogels position performs unexpectedly, Trex 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 Trex will offset losses from the drop in Trex's long position.| Aspen Aerogels vs. Apyx Medical | Aspen Aerogels vs. Century Communities | Aspen Aerogels vs. Ardmore Shpng | Aspen Aerogels vs. American Assets Trust |
| Trex vs. Quanex Building Products | Trex vs. Armstrong World Industries | Trex vs. Gibraltar Industries | Trex vs. Apogee Enterprises |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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