Correlation Between TopBuild Corp and Masco

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

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

Diversification Opportunities for TopBuild Corp and Masco

0.0

Correlation Coefficient

TopBuild Corp  Masco

Pay attention - limited upside

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

Pair Corralation between TopBuild Corp and Masco

If you would invest  113,693  in Masco on September 23, 2024 and sell it today you would earn a total of  1,133  from holding Masco or generate 1.0% return on investment over 90 days.

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

TopBuild Corp  vs.  Masco

TopBuild Corp

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days TopBuild Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, TopBuild Corp is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Masco

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Masco are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Masco is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with TopBuild Corp and Masco

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

The idea behind TopBuild Corp and Masco 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.