Correlation Between AAON and Gibraltar Industries
Can any of the company-specific risk be diversified away by investing in both AAON and Gibraltar Industries 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 AAON and Gibraltar Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AAON Inc and Gibraltar Industries, you can compare the effects of market volatilities on AAON and Gibraltar Industries 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 AAON with a short position of Gibraltar Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of AAON and Gibraltar Industries.
Diversification Opportunities for AAON and Gibraltar Industries
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between AAON and Gibraltar is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding AAON Inc and Gibraltar Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gibraltar Industries and AAON 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 AAON Inc are associated (or correlated) with Gibraltar Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gibraltar Industries has no effect on the direction of AAON i.e., AAON and Gibraltar Industries go up and down completely randomly.
Pair Corralation between AAON and Gibraltar Industries
Given the investment horizon of 90 days AAON Inc is expected to generate 0.83 times more return on investment than Gibraltar Industries. However, AAON Inc is 1.2 times less risky than Gibraltar Industries. It trades about 0.19 of its potential returns per unit of risk. Gibraltar Industries is currently generating about 0.04 per unit of risk. If you would invest 8,526 in AAON Inc on July 10, 2024 and sell it today you would earn a total of 2,389 from holding AAON Inc or generate 28.02% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
AAON Inc vs. Gibraltar Industries
Performance |
Timeline |
AAON Inc |
Gibraltar Industries |
AAON and Gibraltar Industries Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with AAON and Gibraltar Industries
The main advantage of trading using opposite AAON and Gibraltar Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AAON position performs unexpectedly, Gibraltar Industries 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 Gibraltar Industries will offset losses from the drop in Gibraltar Industries' long position.AAON vs. Quanex Building Products | AAON vs. Gibraltar Industries | AAON vs. Armstrong World Industries | AAON vs. Beacon Roofing Supply |
Gibraltar Industries vs. Quanex Building Products | Gibraltar Industries vs. Jeld Wen Holding | Gibraltar Industries vs. Perma Pipe International Holdings | Gibraltar Industries vs. Interface |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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