Correlation Between Cencora and Apogee Enterprises

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

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

Diversification Opportunities for Cencora and Apogee Enterprises

0.42

Correlation Coefficient

Cencora  Apogee Enterprises

Very weak diversification

The 3 months correlation between Cencora and Apogee is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Cencora and Apogee Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apogee Enterprises and Cencora 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 Cencora 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 Cencora i.e., Cencora and Apogee Enterprises go up and down completely randomly.

Pair Corralation between Cencora and Apogee Enterprises

Considering the 90-day investment horizon Cencora is expected to generate 0.37 times more return on investment than Apogee Enterprises. However, Cencora is 2.73 times less risky than Apogee Enterprises. It trades about 0.04 of its potential returns per unit of risk. Apogee Enterprises is currently generating about -0.15 per unit of risk. If you would invest  23,601  in Cencora on October 20, 2024 and sell it today you would earn a total of  604.00  from holding Cencora or generate 2.56% return on investment over 90 days.

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

Cencora  vs.  Apogee Enterprises

Cencora

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cencora are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Cencora is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Apogee Enterprises

Risk-Adjusted Performance

0 of 100

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

Pair Trading with Cencora and Apogee Enterprises

The main advantage of trading using opposite Cencora and Apogee Enterprises positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cencora 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 Cencora 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.

Check out your portfolio center.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.