Correlation Between Intelligent Living and Trex
Can any of the company-specific risk be diversified away by investing in both Intelligent Living and Trex 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 Intelligent Living and Trex into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Intelligent Living Application and Trex Company, you can compare the effects of market volatilities on Intelligent Living and Trex 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 Intelligent Living with a short position of Trex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intelligent Living and Trex.
Diversification Opportunities for Intelligent Living and Trex
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Intelligent and Trex is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Intelligent Living Application and Trex Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trex Company and Intelligent Living 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 Intelligent Living Application are associated (or correlated) with Trex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trex Company has no effect on the direction of Intelligent Living i.e., Intelligent Living and Trex go up and down completely randomly.
Pair Corralation between Intelligent Living and Trex
Given the investment horizon of 90 days Intelligent Living Application is expected to under-perform the Trex. In addition to that, Intelligent Living is 1.24 times more volatile than Trex Company. It trades about -0.09 of its total potential returns per unit of risk. Trex Company is currently generating about 0.13 per unit of volatility. If you would invest 6,658 in Trex Company on August 30, 2024 and sell it today you would earn a total of 785.00 from holding Trex Company or generate 11.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Intelligent Living Application vs. Trex Company
Performance |
| Timeline |
| Intelligent Living |
| Trex Company |
Intelligent Living and Trex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Intelligent Living and Trex
The main advantage of trading using opposite Intelligent Living and Trex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intelligent Living position performs unexpectedly, Trex 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 Trex will offset losses from the drop in Trex's long position.| Intelligent Living vs. Azek Company | Intelligent Living vs. Atlas Engineered Products | Intelligent Living vs. Antelope Enterprise Holdings | Intelligent Living vs. Latham Group |
| Trex vs. Quanex Building Products | Trex vs. Armstrong World Industries | Trex vs. Gibraltar Industries | Trex vs. Apogee Enterprises |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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