Correlation Between Azek and Caesarstone
Can any of the company-specific risk be diversified away by investing in both Azek and Caesarstone 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 Caesarstone into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Azek Company and Caesarstone, you can compare the effects of market volatilities on Azek and Caesarstone 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 Caesarstone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Azek and Caesarstone.
Diversification Opportunities for Azek and Caesarstone
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Azek and Caesarstone is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Azek Company and Caesarstone in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caesarstone 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 Caesarstone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caesarstone has no effect on the direction of Azek i.e., Azek and Caesarstone go up and down completely randomly.
Pair Corralation between Azek and Caesarstone
Given the investment horizon of 90 days Azek Company is expected to generate 0.66 times more return on investment than Caesarstone. However, Azek Company is 1.51 times less risky than Caesarstone. It trades about 0.1 of its potential returns per unit of risk. Caesarstone is currently generating about 0.0 per unit of risk. If you would invest 1,904 in Azek Company on August 28, 2024 and sell it today you would earn a total of 3,430 from holding Azek Company or generate 180.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Azek Company vs. Caesarstone
Performance |
| Timeline |
| Azek Company |
| Caesarstone |
Azek and Caesarstone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Azek and Caesarstone
The main advantage of trading using opposite Azek and Caesarstone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Azek position performs unexpectedly, Caesarstone 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 Caesarstone will offset losses from the drop in Caesarstone's long position.| Azek vs. Louisiana Pacific | Azek vs. Masco | Azek vs. Fortune Brands Innovations | Azek vs. Trane Technologies plc |
| Caesarstone vs. Gibraltar Industries | Caesarstone vs. Quanex Building Products | Caesarstone vs. Jeld Wen Holding | Caesarstone vs. Perma Pipe International Holdings |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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