Correlation Between Quanex Building and Intelligent Living
Can any of the company-specific risk be diversified away by investing in both Quanex Building and Intelligent Living 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 Intelligent Living 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 Intelligent Living Application, you can compare the effects of market volatilities on Quanex Building and Intelligent Living 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 Intelligent Living. Check out your portfolio center. Please also check ongoing floating volatility patterns of Quanex Building and Intelligent Living.
Diversification Opportunities for Quanex Building and Intelligent Living
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Quanex and Intelligent is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Quanex Building Products and Intelligent Living Application in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intelligent Living 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 Intelligent Living. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intelligent Living has no effect on the direction of Quanex Building i.e., Quanex Building and Intelligent Living go up and down completely randomly.
Pair Corralation between Quanex Building and Intelligent Living
Allowing for the 90-day total investment horizon Quanex Building Products is expected to under-perform the Intelligent Living. But the stock apears to be less risky and, when comparing its historical volatility, Quanex Building Products is 1.92 times less risky than Intelligent Living. The stock trades about -0.02 of its potential returns per unit of risk. The Intelligent Living Application is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 42.00 in Intelligent Living Application on August 29, 2024 and sell it today you would earn a total of 60.00 from holding Intelligent Living Application or generate 142.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Quanex Building Products vs. Intelligent Living Application
Performance |
| Timeline |
| Quanex Building Products |
| Intelligent Living |
Quanex Building and Intelligent Living Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Quanex Building and Intelligent Living
The main advantage of trading using opposite Quanex Building and Intelligent Living positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Quanex Building position performs unexpectedly, Intelligent Living 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 Intelligent Living will offset losses from the drop in Intelligent Living's long position.| Quanex Building vs. Gibraltar Industries | Quanex Building vs. Carpenter Technology | Quanex Building vs. Myers Industries | Quanex Building vs. Griffon |
| Intelligent Living vs. Azek Company | Intelligent Living vs. Atlas Engineered Products | Intelligent Living vs. Antelope Enterprise Holdings | Intelligent Living vs. Latham 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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