Correlation Between Owens Corning and Industrials Portfolio
Can any of the company-specific risk be diversified away by investing in both Owens Corning and Industrials Portfolio 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 Owens Corning and Industrials Portfolio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Owens Corning and Industrials Portfolio Industrials, you can compare the effects of market volatilities on Owens Corning and Industrials Portfolio 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 Owens Corning with a short position of Industrials Portfolio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Owens Corning and Industrials Portfolio.
Diversification Opportunities for Owens Corning and Industrials Portfolio
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Owens and Industrials is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Owens Corning and Industrials Portfolio Industri in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrials Portfolio and Owens Corning 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 Owens Corning are associated (or correlated) with Industrials Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrials Portfolio has no effect on the direction of Owens Corning i.e., Owens Corning and Industrials Portfolio go up and down completely randomly.
Pair Corralation between Owens Corning and Industrials Portfolio
Allowing for the 90-day total investment horizon Owens Corning is expected to generate 1.35 times more return on investment than Industrials Portfolio. However, Owens Corning is 1.35 times more volatile than Industrials Portfolio Industrials. It trades about 0.23 of its potential returns per unit of risk. Industrials Portfolio Industrials is currently generating about 0.15 per unit of risk. If you would invest 17,120 in Owens Corning on November 5, 2024 and sell it today you would earn a total of 1,335 from holding Owens Corning or generate 7.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Owens Corning vs. Industrials Portfolio Industri
Performance |
| Timeline |
| Owens Corning |
| Industrials Portfolio |
Owens Corning and Industrials Portfolio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Owens Corning and Industrials Portfolio
The main advantage of trading using opposite Owens Corning and Industrials Portfolio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Owens Corning position performs unexpectedly, Industrials Portfolio 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 Industrials Portfolio will offset losses from the drop in Industrials Portfolio's long position.| Owens Corning vs. Trane Technologies plc | Owens Corning vs. Masco | Owens Corning vs. Quanex Building Products | Owens Corning vs. Jeld Wen Holding |
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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