Correlation Between Janus International and Beacon Roofing
Can any of the company-specific risk be diversified away by investing in both Janus International 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 Janus International and Beacon Roofing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Janus International Group and Beacon Roofing Supply, you can compare the effects of market volatilities on Janus International 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 Janus International with a short position of Beacon Roofing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Janus International and Beacon Roofing.
Diversification Opportunities for Janus International and Beacon Roofing
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Janus and Beacon is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Janus International Group 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 Janus International 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 Janus International Group 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 Janus International i.e., Janus International and Beacon Roofing go up and down completely randomly.
Pair Corralation between Janus International and Beacon Roofing
Considering the 90-day investment horizon Janus International Group is expected to under-perform the Beacon Roofing. In addition to that, Janus International is 2.44 times more volatile than Beacon Roofing Supply. It trades about -0.18 of its total potential returns per unit of risk. Beacon Roofing Supply is currently generating about 0.28 per unit of volatility. If you would invest 9,485 in Beacon Roofing Supply on August 27, 2024 and sell it today you would earn a total of 1,733 from holding Beacon Roofing Supply or generate 18.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Janus International Group vs. Beacon Roofing Supply
Performance |
| Timeline |
| Janus International |
| Beacon Roofing Supply |
Janus International and Beacon Roofing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Janus International and Beacon Roofing
The main advantage of trading using opposite Janus International and Beacon Roofing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Janus International 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.| Janus International vs. Quanex Building Products | Janus International vs. Interface | Janus International vs. Apogee Enterprises | Janus International vs. Gibraltar Industries |
| Beacon Roofing vs. Quanex Building Products | Beacon Roofing vs. Gibraltar Industries | Beacon Roofing vs. Armstrong World Industries | Beacon Roofing vs. Janus International Group |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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