Correlation Between Interface and Trex
Can any of the company-specific risk be diversified away by investing in both Interface and Trex 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 Interface and Trex into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Interface and Trex Company, you can compare the effects of market volatilities on Interface and Trex 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 Interface with a short position of Trex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Interface and Trex.
Diversification Opportunities for Interface and Trex
Weak diversification
The 3 months correlation between Interface and Trex is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Interface and Trex Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trex Company and Interface 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 Interface are associated (or correlated) with Trex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trex Company has no effect on the direction of Interface i.e., Interface and Trex go up and down completely randomly.
Pair Corralation between Interface and Trex
Given the investment horizon of 90 days Interface is expected to generate 1.16 times more return on investment than Trex. However, Interface is 1.16 times more volatile than Trex Company. It trades about 0.06 of its potential returns per unit of risk. Trex Company is currently generating about 0.03 per unit of risk. If you would invest 1,177 in Interface on October 25, 2024 and sell it today you would earn a total of 1,265 from holding Interface or generate 107.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Interface vs. Trex Company
Performance |
| Timeline |
| Interface |
| Trex Company |
Interface and Trex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Interface and Trex
The main advantage of trading using opposite Interface and Trex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Interface position performs unexpectedly, Trex 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 Trex will offset losses from the drop in Trex's long position.| Interface vs. Atos SE | Interface vs. Deveron Corp | Interface vs. Appen Limited | Interface vs. Atos Origin SA |
| Trex vs. Quanex Building Products | Trex vs. Armstrong World Industries | Trex vs. Gibraltar Industries | Trex vs. Apogee Enterprises |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
Other Complementary Tools
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal |