Correlation Between Jeld Wen and Azek

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

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

Diversification Opportunities for Jeld Wen and Azek

0.5

Correlation Coefficient

Jeld Wen  Azek

Very weak diversification

The 3 months correlation between Jeld and Azek is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Jeld Wen Holding and Azek Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Azek Company and Jeld Wen 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 Jeld Wen Holding 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 Jeld Wen i.e., Jeld Wen and Azek go up and down completely randomly.

Pair Corralation between Jeld Wen and Azek

Given the investment horizon of 90 days Jeld Wen Holding is expected to under-perform the Azek. In addition to that, Jeld Wen is 3.56 times more volatile than Azek Company. It trades about -0.33 of its total potential returns per unit of risk. Azek Company is currently generating about -0.24 per unit of volatility. If you would invest  5,123  in Azek Company on November 29, 2024 and sell it today you would lose (445.00) from holding Azek Company or give up 8.69% of portfolio value over 90 days.

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

Jeld Wen Holding  vs.  Azek Company

Jeld Wen Holding

Risk-Adjusted Performance

Very Weak

Over the last 90 days Jeld Wen Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's essential indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

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.

Pair Trading with Jeld Wen and Azek

The main advantage of trading using opposite Jeld Wen and Azek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jeld Wen 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 Jeld Wen Holding 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.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.