Correlation Between Azek and Atlas Engineered
Can any of the company-specific risk be diversified away by investing in both Azek and Atlas Engineered 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 Azek and Atlas Engineered into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Azek Company and Atlas Engineered Products, you can compare the effects of market volatilities on Azek and Atlas Engineered 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 Azek with a short position of Atlas Engineered. Check out your portfolio center. Please also check ongoing floating volatility patterns of Azek and Atlas Engineered.
Diversification Opportunities for Azek and Atlas Engineered
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Azek and Atlas is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Azek Company and Atlas Engineered Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlas Engineered Products and Azek 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 Azek Company are associated (or correlated) with Atlas Engineered. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlas Engineered Products has no effect on the direction of Azek i.e., Azek and Atlas Engineered go up and down completely randomly.
Pair Corralation between Azek and Atlas Engineered
Given the investment horizon of 90 days Azek Company is expected to generate 0.68 times more return on investment than Atlas Engineered. However, Azek Company is 1.47 times less risky than Atlas Engineered. It trades about 0.07 of its potential returns per unit of risk. Atlas Engineered Products is currently generating about 0.03 per unit of risk. If you would invest 2,559 in Azek Company on October 25, 2024 and sell it today you would earn a total of 2,550 from holding Azek Company or generate 99.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Azek Company vs. Atlas Engineered Products
Performance |
| Timeline |
| Azek Company |
| Atlas Engineered Products |
Azek and Atlas Engineered Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Azek and Atlas Engineered
The main advantage of trading using opposite Azek and Atlas Engineered positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Azek position performs unexpectedly, Atlas Engineered 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 Atlas Engineered will offset losses from the drop in Atlas Engineered's long position.| Azek vs. Louisiana Pacific | Azek vs. Masco | Azek vs. Fortune Brands Innovations | Azek vs. Trane Technologies plc |
| Atlas Engineered vs. Travis Perkins PLC | Atlas Engineered vs. Antelope Enterprise Holdings | Atlas Engineered vs. Intelligent Living Application | Atlas Engineered vs. Beacon Roofing Supply |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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