Correlation Between Apogee Enterprises and Azek

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

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

Diversification Opportunities for Apogee Enterprises and Azek

0.34

Correlation Coefficient

Apogee Enterprises  Azek

Weak diversification

The 3 months correlation between Apogee and Azek is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Apogee Enterprises and Azek Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Azek Company 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 Azek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Azek Company has no effect on the direction of Apogee Enterprises i.e., Apogee Enterprises and Azek go up and down completely randomly.

Pair Corralation between Apogee Enterprises and Azek

Given the investment horizon of 90 days Apogee Enterprises is expected to generate 4.0 times less return on investment than Azek. In addition to that, Apogee Enterprises is 1.48 times more volatile than Azek Company. It trades about 0.03 of its total potential returns per unit of risk. Azek Company is currently generating about 0.16 per unit of volatility. If you would invest  4,976  in Azek Company on May 5, 2025 and sell it today you would earn a total of  459.00  from holding Azek Company or generate 9.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	63.49%
Values	Daily Returns

Apogee Enterprises  vs.  Azek Company

Apogee Enterprises

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Apogee Enterprises are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Apogee Enterprises is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Azek Company

Risk-Adjusted Performance

Good

Over the last 90 days Azek Company has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite weak technical and fundamental indicators, Azek disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Apogee Enterprises and Azek

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

The idea behind Apogee Enterprises and Azek Company 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.