Correlation Between Quanex Building and Corning Incorporated

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

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

Diversification Opportunities for Quanex Building and Corning Incorporated

0.21

Correlation Coefficient

Quanex Building  Corning Incorporated

Modest diversification

The 3 months correlation between Quanex and Corning is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Quanex Building Products and Corning Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corning Incorporated and Quanex Building 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 Quanex Building Products are associated (or correlated) with Corning Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corning Incorporated has no effect on the direction of Quanex Building i.e., Quanex Building and Corning Incorporated go up and down completely randomly.

Pair Corralation between Quanex Building and Corning Incorporated

Allowing for the 90-day total investment horizon Quanex Building is expected to generate 8.79 times less return on investment than Corning Incorporated. In addition to that, Quanex Building is 1.63 times more volatile than Corning Incorporated. It trades about 0.0 of its total potential returns per unit of risk. Corning Incorporated is currently generating about 0.07 per unit of volatility. If you would invest  3,392  in Corning Incorporated on October 4, 2024 and sell it today you would earn a total of  1,360  from holding Corning Incorporated or generate 40.09% return on investment over 90 days.

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

Quanex Building Products  vs.  Corning Incorporated

Quanex Building Products

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Quanex Building Products has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Corning Incorporated

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Corning Incorporated are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain essential indicators, Corning Incorporated may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Quanex Building and Corning Incorporated

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

The idea behind Quanex Building Products and Corning Incorporated 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..