Correlation Between Quanex Building and Louisiana Pacific
Can any of the company-specific risk be diversified away by investing in both Quanex Building and Louisiana Pacific 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 Louisiana Pacific 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 Louisiana Pacific, you can compare the effects of market volatilities on Quanex Building and Louisiana Pacific 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 Louisiana Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Quanex Building and Louisiana Pacific.
Diversification Opportunities for Quanex Building and Louisiana Pacific
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Quanex and Louisiana is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Quanex Building Products and Louisiana Pacific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Louisiana Pacific 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 Louisiana Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Louisiana Pacific has no effect on the direction of Quanex Building i.e., Quanex Building and Louisiana Pacific go up and down completely randomly.
Pair Corralation between Quanex Building and Louisiana Pacific
Allowing for the 90-day total investment horizon Quanex Building Products is expected to generate 1.16 times more return on investment than Louisiana Pacific. However, Quanex Building is 1.16 times more volatile than Louisiana Pacific. It trades about -0.16 of its potential returns per unit of risk. Louisiana Pacific is currently generating about -0.23 per unit of risk. If you would invest 2,255 in Quanex Building Products on November 29, 2024 and sell it today you would lose (244.00) from holding Quanex Building Products or give up 10.82% 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. Louisiana Pacific
Performance |
Timeline |
Quanex Building Products |
Louisiana Pacific |
Quanex Building and Louisiana Pacific Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Quanex Building and Louisiana Pacific
The main advantage of trading using opposite Quanex Building and Louisiana Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Quanex Building position performs unexpectedly, Louisiana Pacific 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 Louisiana Pacific will offset losses from the drop in Louisiana Pacific's long position.Quanex Building vs. Gibraltar Industries | ||
Quanex Building vs. Carpenter Technology | ||
Quanex Building vs. Myers Industries | ||
Quanex Building vs. Griffon |
Louisiana Pacific vs. Lennox International | ||
Louisiana Pacific vs. Fortune Brands Innovations | ||
Louisiana Pacific vs. Trane Technologies plc | ||
Louisiana Pacific vs. Johnson Controls International |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
Other Complementary Tools
Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets |