Correlation Between Lixil Group and Azek
Can any of the company-specific risk be diversified away by investing in both Lixil Group and Azek 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 Lixil Group and Azek into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lixil Group Corp and Azek Company, you can compare the effects of market volatilities on Lixil Group and Azek 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 Lixil Group with a short position of Azek. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lixil Group and Azek.
Diversification Opportunities for Lixil Group and Azek
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Lixil and Azek is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Lixil Group Corp and Azek Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Azek Company and Lixil Group 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 Lixil Group Corp are associated (or correlated) with Azek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Azek Company has no effect on the direction of Lixil Group i.e., Lixil Group and Azek go up and down completely randomly.
Pair Corralation between Lixil Group and Azek
Assuming the 90 days horizon Lixil Group Corp is expected to under-perform the Azek. But the pink sheet apears to be less risky and, when comparing its historical volatility, Lixil Group Corp is 1.32 times less risky than Azek. The pink sheet trades about -0.05 of its potential returns per unit of risk. The Azek Company is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 4,134 in Azek Company on August 31, 2024 and sell it today you would earn a total of 1,092 from holding Azek Company or generate 26.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lixil Group Corp vs. Azek Company
Performance |
| Timeline |
| Lixil Group Corp |
| Azek Company |
Lixil Group and Azek Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lixil Group and Azek
The main advantage of trading using opposite Lixil Group and Azek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lixil Group position performs unexpectedly, Azek 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 Azek will offset losses from the drop in Azek's long position.| Lixil Group vs. Masco | Lixil Group vs. Carrier Global Corp | Lixil Group vs. Daikin IndustriesLtd | Lixil Group vs. Lennox International |
| Azek vs. Louisiana Pacific | Azek vs. Masco | Azek vs. Fortune Brands Innovations | Azek vs. Trane Technologies plc |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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