Correlation Between Apogee Enterprises and ON Semiconductor

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

By analyzing existing cross correlation between Apogee Enterprises and ON Semiconductor, you can compare the effects of market volatilities on Apogee Enterprises and ON Semiconductor 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 ON Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apogee Enterprises and ON Semiconductor.

Diversification Opportunities for Apogee Enterprises and ON Semiconductor

0.89

Correlation Coefficient

Apogee Enterprises  ON Semiconductor

Very poor diversification

The 3 months correlation between Apogee and ON Semiconductor is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Apogee Enterprises and ON Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ON Semiconductor 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 ON Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ON Semiconductor has no effect on the direction of Apogee Enterprises i.e., Apogee Enterprises and ON Semiconductor go up and down completely randomly.

Pair Corralation between Apogee Enterprises and ON Semiconductor

Given the investment horizon of 90 days Apogee Enterprises is expected to generate 1.03 times more return on investment than ON Semiconductor. However, Apogee Enterprises is 1.03 times more volatile than ON Semiconductor. It trades about -0.2 of its potential returns per unit of risk. ON Semiconductor is currently generating about -0.21 per unit of risk. If you would invest  7,106  in Apogee Enterprises on December 31, 2024 and sell it today you would lose (2,439) from holding Apogee Enterprises or give up 34.32% of portfolio value over 90 days.

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

Apogee Enterprises  vs.  ON Semiconductor

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 May 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

ON Semiconductor

Risk-Adjusted Performance

Very Weak

Over the last 90 days ON Semiconductor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in May 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Apogee Enterprises and ON Semiconductor

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

The idea behind Apogee Enterprises and ON Semiconductor 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.

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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..