Correlation Between Travis Perkins and Apogee Enterprises

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

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

Diversification Opportunities for Travis Perkins and Apogee Enterprises

0.26

Correlation Coefficient

Travis Perkins  Apogee Enterprises

Modest diversification

The 3 months correlation between Travis and Apogee is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Travis Perkins PLC and Apogee Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apogee Enterprises and Travis Perkins 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 Travis Perkins PLC 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 Travis Perkins i.e., Travis Perkins and Apogee Enterprises go up and down completely randomly.

Pair Corralation between Travis Perkins and Apogee Enterprises

Assuming the 90 days horizon Travis Perkins PLC is expected to generate 0.8 times more return on investment than Apogee Enterprises. However, Travis Perkins PLC is 1.25 times less risky than Apogee Enterprises. It trades about -0.1 of its potential returns per unit of risk. Apogee Enterprises is currently generating about -0.19 per unit of risk. If you would invest  892.00  in Travis Perkins PLC on December 29, 2024 and sell it today you would lose (157.00) from holding Travis Perkins PLC or give up 17.6% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.31%
Values	Daily Returns

Travis Perkins PLC  vs.  Apogee Enterprises

Travis Perkins PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Travis Perkins PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's forward-looking signals remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Apogee Enterprises

Risk-Adjusted Performance

Very Weak

Over the last 90 days Apogee Enterprises 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 basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Travis Perkins and Apogee Enterprises

The main advantage of trading using opposite Travis Perkins and Apogee Enterprises positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Travis Perkins 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 Travis Perkins PLC 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.