Correlation Between Azek and Lixil Group
Can any of the company-specific risk be diversified away by investing in both Azek and Lixil Group 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 Lixil Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Azek Company and Lixil Group Corp, you can compare the effects of market volatilities on Azek and Lixil Group 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 Lixil Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Azek and Lixil Group.
Diversification Opportunities for Azek and Lixil Group
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Azek and Lixil is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Azek Company and Lixil Group Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lixil Group Corp 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 Lixil Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lixil Group Corp has no effect on the direction of Azek i.e., Azek and Lixil Group go up and down completely randomly.
Pair Corralation between Azek and Lixil Group
Given the investment horizon of 90 days Azek Company is expected to generate 1.32 times more return on investment than Lixil Group. However, Azek is 1.32 times more volatile than Lixil Group Corp. It trades about 0.22 of its potential returns per unit of risk. Lixil Group Corp is currently generating about -0.05 per unit of risk. If you would invest 4,134 in Azek Company on August 31, 2024 and sell it today you would earn a total of 1,092 from holding Azek Company or generate 26.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Azek Company vs. Lixil Group Corp
Performance |
| Timeline |
| Azek Company |
| Lixil Group Corp |
Azek and Lixil Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Azek and Lixil Group
The main advantage of trading using opposite Azek and Lixil Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Azek position performs unexpectedly, Lixil Group 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 Lixil Group will offset losses from the drop in Lixil Group's long position.| Azek vs. Louisiana Pacific | Azek vs. Masco | Azek vs. Fortune Brands Innovations | Azek vs. Trane Technologies plc |
| Lixil Group vs. Masco | Lixil Group vs. Carrier Global Corp | Lixil Group vs. Daikin IndustriesLtd | Lixil Group vs. Lennox International |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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