Correlation Between AAON and Apogee Enterprises
Can any of the company-specific risk be diversified away by investing in both AAON and Apogee Enterprises 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 AAON and Apogee Enterprises into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AAON Inc and Apogee Enterprises, you can compare the effects of market volatilities on AAON and Apogee Enterprises 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 AAON with a short position of Apogee Enterprises. Check out your portfolio center. Please also check ongoing floating volatility patterns of AAON and Apogee Enterprises.
Diversification Opportunities for AAON and Apogee Enterprises
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AAON and Apogee is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding AAON Inc and Apogee Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apogee Enterprises and AAON 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 AAON Inc are associated (or correlated) with Apogee Enterprises. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apogee Enterprises has no effect on the direction of AAON i.e., AAON and Apogee Enterprises go up and down completely randomly.
Pair Corralation between AAON and Apogee Enterprises
Given the investment horizon of 90 days AAON Inc is expected to generate 0.91 times more return on investment than Apogee Enterprises. However, AAON Inc is 1.1 times less risky than Apogee Enterprises. It trades about 0.06 of its potential returns per unit of risk. Apogee Enterprises is currently generating about 0.04 per unit of risk. If you would invest 10,713 in AAON Inc on October 3, 2024 and sell it today you would earn a total of 1,055 from holding AAON Inc or generate 9.85% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
AAON Inc vs. Apogee Enterprises
Performance |
Timeline |
AAON Inc |
Apogee Enterprises |
AAON and Apogee Enterprises Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with AAON and Apogee Enterprises
The main advantage of trading using opposite AAON and Apogee Enterprises positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AAON position performs unexpectedly, Apogee Enterprises 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 Apogee Enterprises will offset losses from the drop in Apogee Enterprises' long position.AAON vs. Quanex Building Products | AAON vs. Gibraltar Industries | AAON vs. Armstrong World Industries | AAON vs. Beacon Roofing Supply |
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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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