Correlation Between Masco and Alpha Pro
Can any of the company-specific risk be diversified away by investing in both Masco and Alpha Pro 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 Masco and Alpha Pro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Masco and Alpha Pro Tech, you can compare the effects of market volatilities on Masco and Alpha Pro 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 Masco with a short position of Alpha Pro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Masco and Alpha Pro.
Diversification Opportunities for Masco and Alpha Pro
Poor diversification
The 3 months correlation between Masco and Alpha is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Masco and Alpha Pro Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpha Pro Tech and Masco 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 Masco are associated (or correlated) with Alpha Pro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpha Pro Tech has no effect on the direction of Masco i.e., Masco and Alpha Pro go up and down completely randomly.
Pair Corralation between Masco and Alpha Pro
Considering the 90-day investment horizon Masco is expected to generate 0.63 times more return on investment than Alpha Pro. However, Masco is 1.58 times less risky than Alpha Pro. It trades about 0.07 of its potential returns per unit of risk. Alpha Pro Tech is currently generating about 0.04 per unit of risk. If you would invest 4,570 in Masco on September 23, 2024 and sell it today you would earn a total of 2,869 from holding Masco or generate 62.78% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Masco vs. Alpha Pro Tech
Performance |
Timeline |
Masco |
Alpha Pro Tech |
Masco and Alpha Pro Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Masco and Alpha Pro
The main advantage of trading using opposite Masco and Alpha Pro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Masco position performs unexpectedly, Alpha Pro 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 Alpha Pro will offset losses from the drop in Alpha Pro's long position.Masco vs. Trane Technologies plc | Masco vs. Quanex Building Products | Masco vs. Jeld Wen Holding | Masco vs. Azek Company |
Alpha Pro vs. Trex Company | Alpha Pro vs. Quanex Building Products | Alpha Pro vs. Armstrong World Industries | Alpha Pro vs. Gibraltar Industries |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
Other Complementary Tools
Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
Transaction History View history of all your transactions and understand their impact on performance |