Correlation Between Quanex Building and American Environmental

Can any of the company-specific risk be diversified away by investing in both Quanex Building and American Environmental 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 American Environmental 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 American Environmental, you can compare the effects of market volatilities on Quanex Building and American Environmental 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 American Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Quanex Building and American Environmental.

Diversification Opportunities for Quanex Building and American Environmental

0.0

Correlation Coefficient

Quanex Building  American Environmental

Pay attention - limited upside

The 3 months correlation between Quanex and American is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Quanex Building Products and American Environmental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Environmental 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 American Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Environmental has no effect on the direction of Quanex Building i.e., Quanex Building and American Environmental go up and down completely randomly.

Pair Corralation between Quanex Building and American Environmental

If you would invest  2,607  in Quanex Building Products on October 4, 2024 and sell it today you would lose (183.00) from holding Quanex Building Products or give up 7.02% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.73%
Values	Daily Returns

Quanex Building Products  vs.  American Environmental

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.

American Environmental

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days American Environmental has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, American Environmental is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Quanex Building and American Environmental

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

The idea behind Quanex Building Products and American Environmental 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.