Correlation Between Azek and Carlisle Companies

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

By analyzing existing cross correlation between Azek Company and Carlisle Companies Incorporated, you can compare the effects of market volatilities on Azek and Carlisle Companies 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 Azek with a short position of Carlisle Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Azek and Carlisle Companies.

Diversification Opportunities for Azek and Carlisle Companies

0.67

Correlation Coefficient

Azek  Carlisle Companies

Poor diversification

The 3 months correlation between Azek and Carlisle is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Azek Company and Carlisle Companies Incorporate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlisle Companies and Azek 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 Azek Company are associated (or correlated) with Carlisle Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carlisle Companies has no effect on the direction of Azek i.e., Azek and Carlisle Companies go up and down completely randomly.

Pair Corralation between Azek and Carlisle Companies

Given the investment horizon of 90 days Azek Company is expected to generate 1.63 times more return on investment than Carlisle Companies. However, Azek is 1.63 times more volatile than Carlisle Companies Incorporated. It trades about 0.03 of its potential returns per unit of risk. Carlisle Companies Incorporated is currently generating about -0.03 per unit of risk. If you would invest  4,797  in Azek Company on December 28, 2024 and sell it today you would earn a total of  182.00  from holding Azek Company or generate 3.79% return on investment over 90 days.

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

Azek Company  vs.  Carlisle Companies Incorporate

Azek Company

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Azek Company are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite weak technical and fundamental indicators, Azek may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Carlisle Companies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Carlisle Companies Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Carlisle Companies is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Azek and Carlisle Companies

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

The idea behind Azek Company and Carlisle Companies Incorporated 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.