Correlation Between Quanex Building and Interface
Can any of the company-specific risk be diversified away by investing in both Quanex Building and Interface 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 Interface 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 Interface, you can compare the effects of market volatilities on Quanex Building and Interface 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 Interface. Check out your portfolio center. Please also check ongoing floating volatility patterns of Quanex Building and Interface.
Diversification Opportunities for Quanex Building and Interface
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Quanex and Interface is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Quanex Building Products and Interface in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Interface 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 Interface. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Interface has no effect on the direction of Quanex Building i.e., Quanex Building and Interface go up and down completely randomly.
Pair Corralation between Quanex Building and Interface
Allowing for the 90-day total investment horizon Quanex Building Products is expected to under-perform the Interface. But the stock apears to be less risky and, when comparing its historical volatility, Quanex Building Products is 1.2 times less risky than Interface. The stock trades about -0.01 of its potential returns per unit of risk. The Interface is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,569 in Interface on August 27, 2024 and sell it today you would earn a total of 977.00 from holding Interface or generate 62.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Quanex Building Products vs. Interface
Performance |
| Timeline |
| Quanex Building Products |
| Interface |
Quanex Building and Interface Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Quanex Building and Interface
The main advantage of trading using opposite Quanex Building and Interface positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Quanex Building position performs unexpectedly, Interface 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 Interface will offset losses from the drop in Interface'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 |
| Interface vs. Quanex Building Products | Interface vs. Janus International Group | Interface vs. Apogee Enterprises | Interface 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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