Correlation Between Apogee Enterprises and Owens Corning

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

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

Diversification Opportunities for Apogee Enterprises and Owens Corning

0.84

Correlation Coefficient

Apogee Enterprises  Owens Corning

Very poor diversification

The 3 months correlation between Apogee and Owens is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Apogee Enterprises and Owens Corning in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Owens Corning and Apogee Enterprises 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 Apogee Enterprises 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 Apogee Enterprises i.e., Apogee Enterprises and Owens Corning go up and down completely randomly.

Pair Corralation between Apogee Enterprises and Owens Corning

Given the investment horizon of 90 days Apogee Enterprises is expected to generate 1.09 times less return on investment than Owens Corning. In addition to that, Apogee Enterprises is 1.14 times more volatile than Owens Corning. It trades about 0.19 of its total potential returns per unit of risk. Owens Corning is currently generating about 0.24 per unit of volatility. If you would invest  14,099  in Owens Corning on February 20, 2024 and sell it today you would earn a total of  3,539  from holding Owens Corning or generate 25.1% return on investment over 90 days.

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

Apogee Enterprises  vs.  Owens Corning

Apogee Enterprises

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Apogee Enterprises are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Apogee Enterprises reported solid returns over the last few months and may actually be approaching a breakup point.

Owens Corning

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Owens Corning are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting fundamental indicators, Owens Corning exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Apogee Enterprises and Owens Corning

The main advantage of trading using opposite Apogee Enterprises and Owens Corning positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apogee Enterprises 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 Apogee Enterprises 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.

Check out your portfolio center.

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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.