Correlation Between Azek and Janus International

Can any of the company-specific risk be diversified away by investing in both Azek and Janus 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 Janus 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 Janus International Group, you can compare the effects of market volatilities on Azek and Janus 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 Janus International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Azek and Janus International.

Diversification Opportunities for Azek and Janus International

0.35

Correlation Coefficient

Azek  Janus International

Weak diversification

The 3 months correlation between Azek and Janus is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Azek Company and Janus International Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Janus 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 Janus International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Janus International has no effect on the direction of Azek i.e., Azek and Janus International go up and down completely randomly.

Pair Corralation between Azek and Janus International

Given the investment horizon of 90 days Azek Company is expected to under-perform the Janus International. But the stock apears to be less risky and, when comparing its historical volatility, Azek Company is 1.11 times less risky than Janus International. The stock trades about -0.24 of its potential returns per unit of risk. The Janus International Group is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  818.00  in Janus International Group on November 29, 2024 and sell it today you would lose (12.00) from holding Janus International Group or give up 1.47% of portfolio value over 90 days.

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

Azek Company  vs.  Janus International Group

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.

Janus International

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Janus International Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak fundamental drivers, Janus International may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Azek and Janus International

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

The idea behind Azek Company and Janus International Group 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.