Correlation Between Apogee Enterprises and Beacon Roofing

Can any of the company-specific risk be diversified away by investing in both Apogee Enterprises and Beacon Roofing 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 Apogee Enterprises and Beacon Roofing into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Apogee Enterprises and Beacon Roofing Supply, you can compare the effects of market volatilities on Apogee Enterprises and Beacon Roofing 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 Apogee Enterprises with a short position of Beacon Roofing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apogee Enterprises and Beacon Roofing.

Diversification Opportunities for Apogee Enterprises and Beacon Roofing

-0.81

Correlation Coefficient

Apogee Enterprises  Beacon Roofing

Pay attention - limited upside

The 3 months correlation between Apogee and Beacon is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Apogee Enterprises and Beacon Roofing Supply in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beacon Roofing Supply and Apogee Enterprises 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 Apogee Enterprises are associated (or correlated) with Beacon Roofing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beacon Roofing Supply has no effect on the direction of Apogee Enterprises i.e., Apogee Enterprises and Beacon Roofing go up and down completely randomly.

Pair Corralation between Apogee Enterprises and Beacon Roofing

Given the investment horizon of 90 days Apogee Enterprises is expected to under-perform the Beacon Roofing. In addition to that, Apogee Enterprises is 1.86 times more volatile than Beacon Roofing Supply. It trades about -0.19 of its total potential returns per unit of risk. Beacon Roofing Supply is currently generating about 0.22 per unit of volatility. If you would invest  9,954  in Beacon Roofing Supply on December 29, 2024 and sell it today you would earn a total of  2,432  from holding Beacon Roofing Supply or generate 24.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Apogee Enterprises  vs.  Beacon Roofing Supply

Apogee Enterprises

Risk-Adjusted Performance

Very Weak

Over the last 90 days Apogee Enterprises has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Beacon Roofing Supply

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Beacon Roofing Supply are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Beacon Roofing displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Apogee Enterprises and Beacon Roofing

The main advantage of trading using opposite Apogee Enterprises and Beacon Roofing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apogee Enterprises position performs unexpectedly, Beacon Roofing 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 Beacon Roofing will offset losses from the drop in Beacon Roofing's long position.

The idea behind Apogee Enterprises and Beacon Roofing Supply pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.