Correlation Between Owens Corning and Caesarstone

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

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

Diversification Opportunities for Owens Corning and Caesarstone

0.86

Correlation Coefficient

Owens Corning  Caesarstone

Very poor diversification

The 3 months correlation between Owens and Caesarstone is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Owens Corning and Caesarstone in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caesarstone and Owens Corning 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 Owens Corning are associated (or correlated) with Caesarstone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caesarstone has no effect on the direction of Owens Corning i.e., Owens Corning and Caesarstone go up and down completely randomly.

Pair Corralation between Owens Corning and Caesarstone

Allowing for the 90-day total investment horizon Owens Corning is expected to generate 0.65 times more return on investment than Caesarstone. However, Owens Corning is 1.54 times less risky than Caesarstone. It trades about -0.12 of its potential returns per unit of risk. Caesarstone is currently generating about -0.29 per unit of risk. If you would invest  16,810  in Owens Corning on December 29, 2024 and sell it today you would lose (2,547) from holding Owens Corning or give up 15.15% of portfolio value over 90 days.

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

Owens Corning  vs.  Caesarstone

Owens Corning

Risk-Adjusted Performance

Very Weak

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

Caesarstone

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Owens Corning and Caesarstone

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

The idea behind Owens Corning and Caesarstone 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.