Correlation Between Lixil Group and Quanex Building
Can any of the company-specific risk be diversified away by investing in both Lixil Group and Quanex Building 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 Quanex Building 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 Quanex Building Products, you can compare the effects of market volatilities on Lixil Group and Quanex Building 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 Quanex Building. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lixil Group and Quanex Building.
Diversification Opportunities for Lixil Group and Quanex Building
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lixil and Quanex is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Lixil Group Corp and Quanex Building Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quanex Building Products 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 Quanex Building. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quanex Building Products has no effect on the direction of Lixil Group i.e., Lixil Group and Quanex Building go up and down completely randomly.
Pair Corralation between Lixil Group and Quanex Building
Assuming the 90 days horizon Lixil Group Corp is expected to under-perform the Quanex Building. But the pink sheet apears to be less risky and, when comparing its historical volatility, Lixil Group Corp is 2.76 times less risky than Quanex Building. The pink sheet trades about -0.05 of its potential returns per unit of risk. The Quanex Building Products is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,557 in Quanex Building Products on August 31, 2024 and sell it today you would earn a total of 324.00 from holding Quanex Building Products or generate 12.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lixil Group Corp vs. Quanex Building Products
Performance |
| Timeline |
| Lixil Group Corp |
| Quanex Building Products |
Lixil Group and Quanex Building Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lixil Group and Quanex Building
The main advantage of trading using opposite Lixil Group and Quanex Building positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lixil Group position performs unexpectedly, Quanex Building 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 Quanex Building will offset losses from the drop in Quanex Building's long position.| Lixil Group vs. Masco | Lixil Group vs. Carrier Global Corp | Lixil Group vs. Daikin IndustriesLtd | Lixil Group vs. Lennox International |
| Quanex Building vs. Gibraltar Industries | Quanex Building vs. Carpenter Technology | Quanex Building vs. Myers Industries | Quanex Building vs. Griffon |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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