Correlation Between Azek and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Azek and Dow Jones 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 Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Azek Company and Dow Jones Industrial, you can compare the effects of market volatilities on Azek and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Azek and Dow Jones.
Diversification Opportunities for Azek and Dow Jones
Poor diversification
The 3 months correlation between Azek and Dow is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Azek Company and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Azek i.e., Azek and Dow Jones go up and down completely randomly.
Pair Corralation between Azek and Dow Jones
Given the investment horizon of 90 days Azek Company is expected to generate 3.21 times more return on investment than Dow Jones. However, Azek is 3.21 times more volatile than Dow Jones Industrial. It trades about 0.09 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.08 per unit of risk. If you would invest 2,027 in Azek Company on August 24, 2024 and sell it today you would earn a total of 3,071 from holding Azek Company or generate 151.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Azek Company vs. Dow Jones Industrial
Performance |
| Timeline |
Azek and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Azek Company
Pair trading matchups for Azek
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Azek and Dow Jones
The main advantage of trading using opposite Azek and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Azek position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Azek vs. Louisiana Pacific | Azek vs. Masco | Azek vs. Fortune Brands Innovations | Azek vs. Trane Technologies plc |
| Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. Perseus Mining Limited | Dow Jones vs. Titan Machinery | Dow Jones vs. Simon Property Group |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
Other Complementary Tools
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals |