Correlation Between Lennox International and PGT Innovations
Can any of the company-specific risk be diversified away by investing in both Lennox International and PGT Innovations 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 Lennox International and PGT Innovations into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lennox International and PGT Innovations, you can compare the effects of market volatilities on Lennox International and PGT Innovations 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 Lennox International with a short position of PGT Innovations. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lennox International and PGT Innovations.
Diversification Opportunities for Lennox International and PGT Innovations
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lennox and PGT is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Lennox International and PGT Innovations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PGT Innovations and Lennox International 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 Lennox International are associated (or correlated) with PGT Innovations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PGT Innovations has no effect on the direction of Lennox International i.e., Lennox International and PGT Innovations go up and down completely randomly.
Pair Corralation between Lennox International and PGT Innovations
Considering the 90-day investment horizon Lennox International is expected to generate 1.09 times more return on investment than PGT Innovations. However, Lennox International is 1.09 times more volatile than PGT Innovations. It trades about 0.14 of its potential returns per unit of risk. PGT Innovations is currently generating about 0.07 per unit of risk. If you would invest 29,026 in Lennox International on August 27, 2024 and sell it today you would earn a total of 36,743 from holding Lennox International or generate 126.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 9.38% |
| Values | Daily Returns |
Lennox International vs. PGT Innovations
Performance |
| Timeline |
| Lennox International |
| PGT Innovations |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Lennox International and PGT Innovations Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lennox International and PGT Innovations
The main advantage of trading using opposite Lennox International and PGT Innovations positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lennox International position performs unexpectedly, PGT Innovations 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 PGT Innovations will offset losses from the drop in PGT Innovations' long position.| Lennox International vs. Carrier Global Corp | Lennox International vs. Johnson Controls International | Lennox International vs. Masco | Lennox International vs. Carlisle Companies Incorporated |
| PGT Innovations vs. Quanex Building Products | PGT Innovations vs. Janus International Group | PGT Innovations vs. Interface | PGT Innovations 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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