Correlation Between Jeld Wen and AAON
Can any of the company-specific risk be diversified away by investing in both Jeld Wen 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 Jeld Wen and AAON into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jeld Wen Holding and AAON Inc, you can compare the effects of market volatilities on Jeld Wen 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 Jeld Wen with a short position of AAON. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jeld Wen and AAON.
Diversification Opportunities for Jeld Wen and AAON
Excellent diversification
The 3 months correlation between Jeld and AAON is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Jeld Wen Holding and AAON Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AAON Inc and Jeld Wen 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 Jeld Wen Holding 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 Jeld Wen i.e., Jeld Wen and AAON go up and down completely randomly.
Pair Corralation between Jeld Wen and AAON
Given the investment horizon of 90 days Jeld Wen Holding is expected to under-perform the AAON. In addition to that, Jeld Wen is 1.52 times more volatile than AAON Inc. It trades about -0.05 of its total potential returns per unit of risk. AAON Inc is currently generating about 0.11 per unit of volatility. If you would invest 8,373 in AAON Inc on August 27, 2024 and sell it today you would earn a total of 5,369 from holding AAON Inc or generate 64.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jeld Wen Holding vs. AAON Inc
Performance |
| Timeline |
| Jeld Wen Holding |
| AAON Inc |
Jeld Wen and AAON Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jeld Wen and AAON
The main advantage of trading using opposite Jeld Wen and AAON positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jeld Wen 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.| Jeld Wen vs. Trex Company | Jeld Wen vs. Gibraltar Industries | Jeld Wen vs. Travis Perkins PLC | Jeld Wen vs. Janus International Group |
| 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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