Correlation Between Fortune Brands and Beacon Roofing

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Fortune Brands and Beacon Roofing 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 Fortune Brands and Beacon Roofing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fortune Brands Innovations and Beacon Roofing Supply, you can compare the effects of market volatilities on Fortune Brands and Beacon Roofing 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 Fortune Brands with a short position of Beacon Roofing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortune Brands and Beacon Roofing.

Diversification Opportunities for Fortune Brands and Beacon Roofing

FortuneBeaconDiversified AwayFortuneBeaconDiversified Away100%
0.02
  Correlation Coefficient

Significant diversification

The 3 months correlation between Fortune and Beacon is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Fortune Brands Innovations and Beacon Roofing Supply in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beacon Roofing Supply and Fortune Brands 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 Fortune Brands Innovations are associated (or correlated) with Beacon Roofing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beacon Roofing Supply has no effect on the direction of Fortune Brands i.e., Fortune Brands and Beacon Roofing go up and down completely randomly.

Pair Corralation between Fortune Brands and Beacon Roofing

Given the investment horizon of 90 days Fortune Brands Innovations is expected to under-perform the Beacon Roofing. In addition to that, Fortune Brands is 1.68 times more volatile than Beacon Roofing Supply. It trades about -0.33 of its total potential returns per unit of risk. Beacon Roofing Supply is currently generating about -0.17 per unit of volatility. If you would invest  11,927  in Beacon Roofing Supply on November 29, 2024 and sell it today you would lose (367.00) from holding Beacon Roofing Supply or give up 3.08% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Fortune Brands Innovations  vs.  Beacon Roofing Supply

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -50510
JavaScript chart by amCharts 3.21.15FBIN BECN
       Timeline  
Fortune Brands Innov 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Fortune Brands Innovations has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's forward indicators remain very healthy which may send shares a bit higher in March 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb6668707274767880
Beacon Roofing Supply 

Risk-Adjusted Performance

Weak

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Beacon Roofing Supply are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Beacon Roofing is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb100105110115120

Fortune Brands and Beacon Roofing Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-2.86-2.14-1.42-0.710.00.641.291.952.613.27 0.060.080.100.120.140.16
JavaScript chart by amCharts 3.21.15FBIN BECN
       Returns  

Pair Trading with Fortune Brands and Beacon Roofing

The main advantage of trading using opposite Fortune Brands and Beacon Roofing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortune Brands position performs unexpectedly, Beacon Roofing 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 Beacon Roofing will offset losses from the drop in Beacon Roofing's long position.
The idea behind Fortune Brands Innovations and Beacon Roofing Supply pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.

Other Complementary Tools

Bond Analysis
Evaluate and analyze corporate bonds as a potential investment for your portfolios.
Positions Ratings
Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance
Risk-Return Analysis
View associations between returns expected from investment and the risk you assume
Portfolio Volatility
Check portfolio volatility and analyze historical return density to properly model market risk
Technical Analysis
Check basic technical indicators and analysis based on most latest market data