Correlation Between Beacon Roofing and AAON
Can any of the company-specific risk be diversified away by investing in both Beacon Roofing and AAON 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 Beacon Roofing and AAON into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Beacon Roofing Supply and AAON Inc, you can compare the effects of market volatilities on Beacon Roofing and AAON 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 Beacon Roofing with a short position of AAON. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beacon Roofing and AAON.
Diversification Opportunities for Beacon Roofing and AAON
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Beacon and AAON is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Beacon Roofing Supply and AAON Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AAON Inc and Beacon Roofing 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 Beacon Roofing Supply are associated (or correlated) with AAON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AAON Inc has no effect on the direction of Beacon Roofing i.e., Beacon Roofing and AAON go up and down completely randomly.
Pair Corralation between Beacon Roofing and AAON
Given the investment horizon of 90 days Beacon Roofing is expected to generate 1.58 times less return on investment than AAON. But when comparing it to its historical volatility, Beacon Roofing Supply is 1.58 times less risky than AAON. It trades about 0.26 of its potential returns per unit of risk. AAON Inc is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 10,689 in AAON Inc on August 24, 2024 and sell it today you would earn a total of 2,867 from holding AAON Inc or generate 26.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Beacon Roofing Supply vs. AAON Inc
Performance |
| Timeline |
| Beacon Roofing Supply |
| AAON Inc |
Beacon Roofing and AAON Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Beacon Roofing and AAON
The main advantage of trading using opposite Beacon Roofing and AAON positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beacon Roofing position performs unexpectedly, AAON 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 AAON will offset losses from the drop in AAON's long position.| Beacon Roofing vs. Quanex Building Products | Beacon Roofing vs. Gibraltar Industries | Beacon Roofing vs. Armstrong World Industries | Beacon Roofing vs. Janus International Group |
| AAON vs. Quanex Building Products | AAON vs. Gibraltar Industries | AAON vs. Armstrong World Industries | AAON 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
Other Complementary Tools
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Stocks Directory Find actively traded stocks across global markets |