Correlation Between Azek and Masonite International

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

By analyzing existing cross correlation between Azek Company and Masonite International Corp, you can compare the effects of market volatilities on Azek and Masonite International 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 Masonite International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Azek and Masonite International.

Diversification Opportunities for Azek and Masonite International

0.0

Correlation Coefficient

Azek  Masonite International

Pay attention - limited upside

The 3 months correlation between Azek and Masonite is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Azek Company and Masonite International Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Masonite International 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 Masonite International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Masonite International has no effect on the direction of Azek i.e., Azek and Masonite International go up and down completely randomly.

Pair Corralation between Azek and Masonite International

If you would invest (100.00) in Masonite International Corp on November 29, 2024 and sell it today you would earn a total of  100.00  from holding Masonite International Corp or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Azek Company  vs.  Masonite International Corp

Azek Company

Risk-Adjusted Performance

Very Weak

Over the last 90 days Azek Company has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Masonite International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Masonite International Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Masonite International is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Azek and Masonite International

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

The idea behind Azek Company and Masonite International Corp 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.