Correlation Between Johnson Controls and AAON
Can any of the company-specific risk be diversified away by investing in both Johnson Controls 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 Johnson Controls and AAON into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Johnson Controls International and AAON Inc, you can compare the effects of market volatilities on Johnson Controls 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 Johnson Controls with a short position of AAON. Check out your portfolio center. Please also check ongoing floating volatility patterns of Johnson Controls and AAON.
Diversification Opportunities for Johnson Controls and AAON
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Johnson and AAON is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Johnson Controls International and AAON Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AAON Inc and Johnson Controls 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 Johnson Controls International 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 Johnson Controls i.e., Johnson Controls and AAON go up and down completely randomly.
Pair Corralation between Johnson Controls and AAON
Considering the 90-day investment horizon Johnson Controls is expected to generate 2.62 times less return on investment than AAON. But when comparing it to its historical volatility, Johnson Controls International is 1.99 times less risky than AAON. It trades about 0.2 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 | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Johnson Controls International vs. AAON Inc
Performance |
| Timeline |
| Johnson Controls Int |
| AAON Inc |
Johnson Controls and AAON Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Johnson Controls and AAON
The main advantage of trading using opposite Johnson Controls and AAON positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Johnson Controls 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.| Johnson Controls vs. Carrier Global Corp | Johnson Controls vs. Lennox International | Johnson Controls vs. Masco | Johnson Controls vs. Carlisle Companies Incorporated |
| 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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