Correlation Between Owens Corning and Orbital ATK

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

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

Diversification Opportunities for Owens Corning and Orbital ATK

0.0

Correlation Coefficient

Owens Corning  Orbital ATK

Pay attention - limited upside

The 3 months correlation between Owens and Orbital is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Owens Corning and Orbital ATK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orbital ATK 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 Orbital ATK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orbital ATK has no effect on the direction of Owens Corning i.e., Owens Corning and Orbital ATK go up and down completely randomly.

Pair Corralation between Owens Corning and Orbital ATK

If you would invest  9,432  in Owens Corning on January 24, 2024 and sell it today you would earn a total of  7,012  from holding Owens Corning or generate 74.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Owens Corning  vs.  Orbital ATK

Owens Corning

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Owens Corning are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent fundamental indicators, Owens Corning exhibited solid returns over the last few months and may actually be approaching a breakup point.

Orbital ATK

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Orbital ATK has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Orbital ATK is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Owens Corning and Orbital ATK

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

The idea behind Owens Corning and Orbital ATK 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.