Correlation Between Intelligent Living and Masonite International

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

By analyzing existing cross correlation between Intelligent Living Application and Masonite International Corp, you can compare the effects of market volatilities on Intelligent Living and Masonite International 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 Intelligent Living with a short position of Masonite International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intelligent Living and Masonite International.

Diversification Opportunities for Intelligent Living and Masonite International

-0.25

Correlation Coefficient

Intelligent Living  Masonite International

Very good diversification

The 3 months correlation between Intelligent and Masonite is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Intelligent Living Application and Masonite International Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Masonite International and Intelligent Living 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 Intelligent Living Application are associated (or correlated) with Masonite International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Masonite International has no effect on the direction of Intelligent Living i.e., Intelligent Living and Masonite International go up and down completely randomly.

Pair Corralation between Intelligent Living and Masonite International

Given the investment horizon of 90 days Intelligent Living Application is expected to under-perform the Masonite International. In addition to that, Intelligent Living is 32.86 times more volatile than Masonite International Corp. It trades about -0.03 of its total potential returns per unit of risk. Masonite International Corp is currently generating about 0.16 per unit of volatility. If you would invest  13,093  in Masonite International Corp on March 13, 2024 and sell it today you would earn a total of  191.00  from holding Masonite International Corp or generate 1.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	71.43%
Values	Daily Returns

Intelligent Living Application  vs.  Masonite International Corp

Intelligent Living

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intelligent Living Application has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in July 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Masonite International

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Masonite International Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Masonite International is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Intelligent Living and Masonite International

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

The idea behind Intelligent Living Application and Masonite International Corp 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.