Correlation Between AAON and Owens Corning
Can any of the company-specific risk be diversified away by investing in both AAON and Owens Corning 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 Owens Corning into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AAON Inc and Owens Corning, you can compare the effects of market volatilities on AAON and Owens Corning 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 Owens Corning. Check out your portfolio center. Please also check ongoing floating volatility patterns of AAON and Owens Corning.
Diversification Opportunities for AAON and Owens Corning
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between AAON and Owens is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding AAON Inc and Owens Corning in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Owens Corning 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 Owens Corning. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Owens Corning has no effect on the direction of AAON i.e., AAON and Owens Corning go up and down completely randomly.
Pair Corralation between AAON and Owens Corning
Given the investment horizon of 90 days AAON Inc is expected to under-perform the Owens Corning. In addition to that, AAON is 2.3 times more volatile than Owens Corning. It trades about -0.13 of its total potential returns per unit of risk. Owens Corning is currently generating about -0.15 per unit of volatility. If you would invest 17,291 in Owens Corning on December 18, 2024 and sell it today you would lose (2,785) from holding Owens Corning or give up 16.11% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
AAON Inc vs. Owens Corning
Performance |
Timeline |
AAON Inc |
Owens Corning |
AAON and Owens Corning Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with AAON and Owens Corning
The main advantage of trading using opposite AAON and Owens Corning positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AAON position performs unexpectedly, Owens Corning 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 Owens Corning will offset losses from the drop in Owens Corning's 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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