Correlation Between Quanex Building and Compagnie
Can any of the company-specific risk be diversified away by investing in both Quanex Building and Compagnie 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 Compagnie 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 Compagnie de Saint Gobain, you can compare the effects of market volatilities on Quanex Building and Compagnie 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 Compagnie. Check out your portfolio center. Please also check ongoing floating volatility patterns of Quanex Building and Compagnie.
Diversification Opportunities for Quanex Building and Compagnie
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Quanex and Compagnie is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Quanex Building Products and Compagnie de Saint Gobain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie de Saint 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 Compagnie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie de Saint has no effect on the direction of Quanex Building i.e., Quanex Building and Compagnie go up and down completely randomly.
Pair Corralation between Quanex Building and Compagnie
Allowing for the 90-day total investment horizon Quanex Building Products is expected to under-perform the Compagnie. In addition to that, Quanex Building is 1.43 times more volatile than Compagnie de Saint Gobain. It trades about -0.03 of its total potential returns per unit of risk. Compagnie de Saint Gobain is currently generating about -0.02 per unit of volatility. If you would invest 1,818 in Compagnie de Saint Gobain on August 31, 2024 and sell it today you would lose (16.00) from holding Compagnie de Saint Gobain or give up 0.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Quanex Building Products vs. Compagnie de Saint Gobain
Performance |
| Timeline |
| Quanex Building Products |
| Compagnie de Saint |
Quanex Building and Compagnie Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Quanex Building and Compagnie
The main advantage of trading using opposite Quanex Building and Compagnie positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Quanex Building position performs unexpectedly, Compagnie 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 Compagnie will offset losses from the drop in Compagnie's long position.| Quanex Building vs. Gibraltar Industries | Quanex Building vs. Carpenter Technology | Quanex Building vs. Myers Industries | Quanex Building vs. Griffon |
| Compagnie vs. Trane Technologies plc | Compagnie vs. AAON Inc | Compagnie vs. Quanex Building Products | Compagnie vs. Gibraltar Industries |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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