Correlation Between Primo Brands and Apogee Enterprises

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

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

Diversification Opportunities for Primo Brands and Apogee Enterprises

-0.19

Correlation Coefficient

Primo Brands  Apogee Enterprises

Good diversification

The 3 months correlation between Primo and Apogee is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Primo Brands and Apogee Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apogee Enterprises and Primo Brands 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 Primo Brands are associated (or correlated) with Apogee Enterprises. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apogee Enterprises has no effect on the direction of Primo Brands i.e., Primo Brands and Apogee Enterprises go up and down completely randomly.

Pair Corralation between Primo Brands and Apogee Enterprises

Given the investment horizon of 90 days Primo Brands is expected to generate 1.25 times more return on investment than Apogee Enterprises. However, Primo Brands is 1.25 times more volatile than Apogee Enterprises. It trades about 0.19 of its potential returns per unit of risk. Apogee Enterprises is currently generating about -0.08 per unit of risk. If you would invest  2,486  in Primo Brands on October 9, 2024 and sell it today you would earn a total of  640.00  from holding Primo Brands or generate 25.74% return on investment over 90 days.

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

Primo Brands  vs.  Apogee Enterprises

Primo Brands

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Primo Brands are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile primary indicators, Primo Brands sustained solid returns over the last few months and may actually be approaching a breakup point.

Apogee Enterprises

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Apogee Enterprises has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Primo Brands and Apogee Enterprises

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

The idea behind Primo Brands and Apogee Enterprises 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.