Correlation Between Trex and Aspen Aerogels
Can any of the company-specific risk be diversified away by investing in both Trex and Aspen Aerogels 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 Trex and Aspen Aerogels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Trex Company and Aspen Aerogels, you can compare the effects of market volatilities on Trex and Aspen Aerogels 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 Trex with a short position of Aspen Aerogels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trex and Aspen Aerogels.
Diversification Opportunities for Trex and Aspen Aerogels
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Trex and Aspen is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Trex Company and Aspen Aerogels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aspen Aerogels and Trex 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 Trex Company are associated (or correlated) with Aspen Aerogels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aspen Aerogels has no effect on the direction of Trex i.e., Trex and Aspen Aerogels go up and down completely randomly.
Pair Corralation between Trex and Aspen Aerogels
Given the investment horizon of 90 days Trex is expected to generate 1.4 times less return on investment than Aspen Aerogels. But when comparing it to its historical volatility, Trex Company is 2.17 times less risky than Aspen Aerogels. It trades about 0.05 of its potential returns per unit of risk. Aspen Aerogels is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,121 in Aspen Aerogels on August 27, 2024 and sell it today you would earn a total of 310.00 from holding Aspen Aerogels or generate 27.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Trex Company vs. Aspen Aerogels
Performance |
| Timeline |
| Trex Company |
| Aspen Aerogels |
Trex and Aspen Aerogels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Trex and Aspen Aerogels
The main advantage of trading using opposite Trex and Aspen Aerogels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trex position performs unexpectedly, Aspen Aerogels 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 Aspen Aerogels will offset losses from the drop in Aspen Aerogels' long position.| Trex vs. Quanex Building Products | Trex vs. Armstrong World Industries | Trex vs. Gibraltar Industries | Trex vs. Apogee Enterprises |
| Aspen Aerogels vs. Apyx Medical | Aspen Aerogels vs. Century Communities | Aspen Aerogels vs. Ardmore Shpng | Aspen Aerogels vs. American Assets Trust |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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