Correlation Between Builders FirstSource and Apogee Enterprises

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

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

Diversification Opportunities for Builders FirstSource and Apogee Enterprises

-0.03

Correlation Coefficient

Builders FirstSource  Apogee Enterprises

Good diversification

The 3 months correlation between Builders and Apogee is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Builders FirstSource and Apogee Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apogee Enterprises and Builders FirstSource 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 Builders FirstSource are associated (or correlated) with Apogee Enterprises. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apogee Enterprises has no effect on the direction of Builders FirstSource i.e., Builders FirstSource and Apogee Enterprises go up and down completely randomly.

Pair Corralation between Builders FirstSource and Apogee Enterprises

Given the investment horizon of 90 days Builders FirstSource is expected to generate 0.73 times more return on investment than Apogee Enterprises. However, Builders FirstSource is 1.36 times less risky than Apogee Enterprises. It trades about -0.09 of its potential returns per unit of risk. Apogee Enterprises is currently generating about -0.19 per unit of risk. If you would invest  14,337  in Builders FirstSource on December 29, 2024 and sell it today you would lose (1,886) from holding Builders FirstSource or give up 13.15% of portfolio value over 90 days.

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

Builders FirstSource  vs.  Apogee Enterprises

Builders FirstSource

Risk-Adjusted Performance

Very Weak

Over the last 90 days Builders FirstSource has generated negative risk-adjusted returns adding no value to investors with long positions. Even with fragile performance in the last few months, the Stock's fundamental indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

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

Pair Trading with Builders FirstSource and Apogee Enterprises

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

The idea behind Builders FirstSource and Apogee Enterprises 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.