Correlation Between Gibraltar Industries and Owens Corning

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

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

Diversification Opportunities for Gibraltar Industries and Owens Corning

0.68

Correlation Coefficient

Gibraltar Industries  Owens Corning

Poor diversification

The 3 months correlation between Gibraltar and Owens is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Gibraltar Industries and Owens Corning in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Owens Corning and Gibraltar Industries 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 Gibraltar Industries are associated (or correlated) with Owens Corning. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Owens Corning has no effect on the direction of Gibraltar Industries i.e., Gibraltar Industries and Owens Corning go up and down completely randomly.

Pair Corralation between Gibraltar Industries and Owens Corning

Given the investment horizon of 90 days Gibraltar Industries is expected to generate 4.85 times less return on investment than Owens Corning. In addition to that, Gibraltar Industries is 1.12 times more volatile than Owens Corning. It trades about 0.01 of its total potential returns per unit of risk. Owens Corning is currently generating about 0.07 per unit of volatility. If you would invest  9,899  in Owens Corning on October 5, 2024 and sell it today you would earn a total of  7,030  from holding Owens Corning or generate 71.02% return on investment over 90 days.

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

Gibraltar Industries  vs.  Owens Corning

Gibraltar Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gibraltar Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Owens Corning

Risk-Adjusted Performance

0 of 100

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 rather sound fundamental indicators, Owens Corning is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Gibraltar Industries and Owens Corning

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

The idea behind Gibraltar Industries and Owens Corning 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.