Correlation Between Azek and View

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

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

Diversification Opportunities for Azek and View

0.39

Correlation Coefficient

Azek  View

Weak diversification

The 3 months correlation between Azek and View is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Azek Company and View Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on View Inc and Azek 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 Azek Company are associated (or correlated) with View. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of View Inc has no effect on the direction of Azek i.e., Azek and View go up and down completely randomly.

Pair Corralation between Azek and View

Given the investment horizon of 90 days Azek Company is expected to generate 0.13 times more return on investment than View. However, Azek Company is 7.64 times less risky than View. It trades about 0.07 of its potential returns per unit of risk. View Inc is currently generating about -0.2 per unit of risk. If you would invest  4,620  in Azek Company on February 16, 2024 and sell it today you would earn a total of  139.00  from holding Azek Company or generate 3.01% return on investment over 90 days.

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

Azek Company  vs.  View Inc

Azek Company

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Azek Company are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent technical and fundamental indicators, Azek may actually be approaching a critical reversion point that can send shares even higher in June 2024.

View Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days View Inc 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 technical and fundamental indicators remain fairly stable which may send shares a bit higher in June 2024. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Azek and View

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

The idea behind Azek Company and View Inc 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.