Correlation Between Jeld Wen and Trex
Can any of the company-specific risk be diversified away by investing in both Jeld Wen 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 Jeld Wen and Trex 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 Trex Company, you can compare the effects of market volatilities on Jeld Wen 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 Jeld Wen with a short position of Trex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jeld Wen and Trex.
Diversification Opportunities for Jeld Wen and Trex
Very good diversification
The 3 months correlation between Jeld and Trex is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Jeld Wen Holding and Trex Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trex Company 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 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 Jeld Wen i.e., Jeld Wen and Trex go up and down completely randomly.
Pair Corralation between Jeld Wen and Trex
Given the investment horizon of 90 days Jeld Wen Holding is expected to generate 1.4 times more return on investment than Trex. However, Jeld Wen is 1.4 times more volatile than Trex Company. It trades about 0.24 of its potential returns per unit of risk. Trex Company is currently generating about 0.1 per unit of risk. If you would invest 838.00 in Jeld Wen Holding on October 26, 2024 and sell it today you would earn a total of 122.00 from holding Jeld Wen Holding or generate 14.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jeld Wen Holding vs. Trex Company
Performance |
| Timeline |
| Jeld Wen Holding |
| Trex Company |
Jeld Wen and Trex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jeld Wen and Trex
The main advantage of trading using opposite Jeld Wen and Trex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jeld Wen 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.| Jeld Wen vs. Gibraltar Industries | Jeld Wen vs. Quanex Building Products | Jeld Wen vs. Perma Pipe International Holdings | Jeld Wen vs. Interface |
| 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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