Correlation Between Caesarstone and AAON
Can any of the company-specific risk be diversified away by investing in both Caesarstone 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 Caesarstone and AAON into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caesarstone and AAON Inc, you can compare the effects of market volatilities on Caesarstone 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 Caesarstone with a short position of AAON. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caesarstone and AAON.
Diversification Opportunities for Caesarstone and AAON
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Caesarstone and AAON is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Caesarstone and AAON Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AAON Inc and Caesarstone 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 Caesarstone 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 Caesarstone i.e., Caesarstone and AAON go up and down completely randomly.
Pair Corralation between Caesarstone and AAON
Given the investment horizon of 90 days Caesarstone is expected to generate 0.73 times more return on investment than AAON. However, Caesarstone is 1.37 times less risky than AAON. It trades about 0.12 of its potential returns per unit of risk. AAON Inc is currently generating about -0.04 per unit of risk. If you would invest 430.00 in Caesarstone on November 5, 2024 and sell it today you would earn a total of 28.00 from holding Caesarstone or generate 6.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caesarstone vs. AAON Inc
Performance |
| Timeline |
| Caesarstone |
| AAON Inc |
Caesarstone and AAON Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caesarstone and AAON
The main advantage of trading using opposite Caesarstone and AAON positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caesarstone 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.| Caesarstone vs. Gibraltar Industries | Caesarstone vs. Quanex Building Products | Caesarstone vs. Jeld Wen Holding | Caesarstone vs. Perma Pipe International Holdings |
| 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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