Correlation Between Jeld Wen and Beacon Roofing
Can any of the company-specific risk be diversified away by investing in both Jeld Wen 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 Jeld Wen and Beacon Roofing 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 Beacon Roofing Supply, you can compare the effects of market volatilities on Jeld Wen 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 Jeld Wen with a short position of Beacon Roofing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jeld Wen and Beacon Roofing.
Diversification Opportunities for Jeld Wen and Beacon Roofing
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Jeld and Beacon is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Jeld Wen Holding 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 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 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 Jeld Wen i.e., Jeld Wen and Beacon Roofing go up and down completely randomly.
Pair Corralation between Jeld Wen and Beacon Roofing
Given the investment horizon of 90 days Jeld Wen Holding is expected to under-perform the Beacon Roofing. In addition to that, Jeld Wen is 1.7 times more volatile than Beacon Roofing Supply. It trades about -0.05 of its total potential returns per unit of risk. Beacon Roofing Supply is currently generating about 0.07 per unit of volatility. If you would invest 8,589 in Beacon Roofing Supply on August 27, 2024 and sell it today you would earn a total of 2,629 from holding Beacon Roofing Supply or generate 30.61% 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. Beacon Roofing Supply
Performance |
| Timeline |
| Jeld Wen Holding |
| Beacon Roofing Supply |
Jeld Wen and Beacon Roofing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jeld Wen and Beacon Roofing
The main advantage of trading using opposite Jeld Wen and Beacon Roofing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jeld Wen 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.| Jeld Wen vs. Trex Company | Jeld Wen vs. Gibraltar Industries | Jeld Wen vs. Travis Perkins PLC | Jeld Wen vs. Janus International Group |
| 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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