Correlation Between Quanex Building and Apogee Enterprises
Can any of the company-specific risk be diversified away by investing in both Quanex Building and Apogee Enterprises 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 Quanex Building and Apogee Enterprises into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Quanex Building Products and Apogee Enterprises, you can compare the effects of market volatilities on Quanex Building and Apogee Enterprises 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 Quanex Building with a short position of Apogee Enterprises. Check out your portfolio center. Please also check ongoing floating volatility patterns of Quanex Building and Apogee Enterprises.
Diversification Opportunities for Quanex Building and Apogee Enterprises
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Quanex and Apogee is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Quanex Building Products and Apogee Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apogee Enterprises and Quanex Building 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 Quanex Building Products are associated (or correlated) with Apogee Enterprises. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apogee Enterprises has no effect on the direction of Quanex Building i.e., Quanex Building and Apogee Enterprises go up and down completely randomly.
Pair Corralation between Quanex Building and Apogee Enterprises
Allowing for the 90-day total investment horizon Quanex Building is expected to generate 3.16 times less return on investment than Apogee Enterprises. But when comparing it to its historical volatility, Quanex Building Products is 1.15 times less risky than Apogee Enterprises. It trades about 0.08 of its potential returns per unit of risk. Apogee Enterprises is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 7,669 in Apogee Enterprises on August 27, 2024 and sell it today you would earn a total of 653.00 from holding Apogee Enterprises or generate 8.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Quanex Building Products vs. Apogee Enterprises
Performance |
| Timeline |
| Quanex Building Products |
| Apogee Enterprises |
Quanex Building and Apogee Enterprises Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Quanex Building and Apogee Enterprises
The main advantage of trading using opposite Quanex Building and Apogee Enterprises positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Quanex Building position performs unexpectedly, Apogee Enterprises 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 Apogee Enterprises will offset losses from the drop in Apogee Enterprises' long position.| Quanex Building vs. Trex Company | Quanex Building vs. Gibraltar Industries | Quanex Building vs. Travis Perkins PLC | Quanex Building vs. Janus International Group |
| Apogee Enterprises vs. Trex Company | Apogee Enterprises vs. Gibraltar Industries | Apogee Enterprises vs. Travis Perkins PLC | Apogee Enterprises 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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