Correlation Between Carlisle Companies and Azek

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

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

Diversification Opportunities for Carlisle Companies and Azek

0.67

Correlation Coefficient

Carlisle Companies  Azek

Poor diversification

The 3 months correlation between Carlisle and Azek is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Carlisle Companies Incorporate and Azek Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Azek Company and Carlisle Companies 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 Carlisle Companies Incorporated are associated (or correlated) with Azek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Azek Company has no effect on the direction of Carlisle Companies i.e., Carlisle Companies and Azek go up and down completely randomly.

Pair Corralation between Carlisle Companies and Azek

Considering the 90-day investment horizon Carlisle Companies Incorporated is expected to under-perform the Azek. But the stock apears to be less risky and, when comparing its historical volatility, Carlisle Companies Incorporated is 1.63 times less risky than Azek. The stock trades about -0.03 of its potential returns per unit of risk. The Azek Company is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  4,797  in Azek Company on December 28, 2024 and sell it today you would earn a total of  182.00  from holding Azek Company or generate 3.79% return on investment over 90 days.

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

Carlisle Companies Incorporate  vs.  Azek Company

Carlisle Companies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Carlisle Companies Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Carlisle Companies is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Azek Company

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Azek Company are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite weak technical and fundamental indicators, Azek may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Carlisle Companies and Azek

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

The idea behind Carlisle Companies Incorporated and Azek Company 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.