Correlation Between Quanex Building and Owens Corning
Can any of the company-specific risk be diversified away by investing in both Quanex Building and Owens Corning 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 Owens Corning 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 Owens Corning, you can compare the effects of market volatilities on Quanex Building and Owens Corning 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 Owens Corning. Check out your portfolio center. Please also check ongoing floating volatility patterns of Quanex Building and Owens Corning.
Diversification Opportunities for Quanex Building and Owens Corning
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Quanex and Owens is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Quanex Building Products and Owens Corning in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Owens Corning 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 Owens Corning. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Owens Corning has no effect on the direction of Quanex Building i.e., Quanex Building and Owens Corning go up and down completely randomly.
Pair Corralation between Quanex Building and Owens Corning
Allowing for the 90-day total investment horizon Quanex Building is expected to generate 3.47 times less return on investment than Owens Corning. In addition to that, Quanex Building is 1.12 times more volatile than Owens Corning. It trades about 0.08 of its total potential returns per unit of risk. Owens Corning is currently generating about 0.3 per unit of volatility. If you would invest 18,505 in Owens Corning on August 27, 2024 and sell it today you would earn a total of 1,772 from holding Owens Corning or generate 9.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Quanex Building Products vs. Owens Corning
Performance |
| Timeline |
| Quanex Building Products |
| Owens Corning |
Quanex Building and Owens Corning Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Quanex Building and Owens Corning
The main advantage of trading using opposite Quanex Building and Owens Corning positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Quanex Building position performs unexpectedly, Owens Corning 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 Owens Corning will offset losses from the drop in Owens Corning's long position.| Quanex Building vs. Trex Company | Quanex Building vs. Gibraltar Industries | Quanex Building vs. Travis Perkins PLC | Quanex Building vs. Janus International Group |
| Owens Corning vs. Trex Company | Owens Corning vs. Gibraltar Industries | Owens Corning vs. Travis Perkins PLC | Owens Corning 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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