Correlation Between Azek and Jeld Wen
Can any of the company-specific risk be diversified away by investing in both Azek and Jeld Wen 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 Jeld Wen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Azek Company and Jeld Wen Holding, you can compare the effects of market volatilities on Azek and Jeld Wen 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 Jeld Wen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Azek and Jeld Wen.
Diversification Opportunities for Azek and Jeld Wen
Very good diversification
The 3 months correlation between Azek and Jeld is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Azek Company and Jeld Wen Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jeld Wen Holding 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 Jeld Wen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jeld Wen Holding has no effect on the direction of Azek i.e., Azek and Jeld Wen go up and down completely randomly.
Pair Corralation between Azek and Jeld Wen
Given the investment horizon of 90 days Azek Company is expected to generate 0.55 times more return on investment than Jeld Wen. However, Azek Company is 1.8 times less risky than Jeld Wen. It trades about 0.03 of its potential returns per unit of risk. Jeld Wen Holding is currently generating about -0.05 per unit of risk. If you would invest 4,811 in Azek Company on August 27, 2024 and sell it today you would earn a total of 287.00 from holding Azek Company or generate 5.97% 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. Jeld Wen Holding
Performance |
| Timeline |
| Azek Company |
| Jeld Wen Holding |
Azek and Jeld Wen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Azek and Jeld Wen
The main advantage of trading using opposite Azek and Jeld Wen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Azek position performs unexpectedly, Jeld Wen 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 Jeld Wen will offset losses from the drop in Jeld Wen's long position.| Azek vs. Trex Company | Azek vs. Gibraltar Industries | Azek vs. Travis Perkins PLC | Azek vs. Janus International Group |
| Jeld Wen vs. Trex Company | Jeld Wen vs. Gibraltar Industries | Jeld Wen vs. Travis Perkins PLC | Jeld Wen vs. Janus International 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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