Correlation Between Quanex Building and Chalice Brands

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

By analyzing existing cross correlation between Quanex Building Products and Chalice Brands, you can compare the effects of market volatilities on Quanex Building and Chalice Brands 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 Quanex Building with a short position of Chalice Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Quanex Building and Chalice Brands.

Diversification Opportunities for Quanex Building and Chalice Brands

0.66

Correlation Coefficient

Quanex Building  Chalice Brands

Poor diversification

The 3 months correlation between Quanex and Chalice is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Quanex Building Products and Chalice Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chalice Brands and Quanex Building 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 Quanex Building Products are associated (or correlated) with Chalice Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chalice Brands has no effect on the direction of Quanex Building i.e., Quanex Building and Chalice Brands go up and down completely randomly.

Pair Corralation between Quanex Building and Chalice Brands

Allowing for the 90-day total investment horizon Quanex Building is expected to generate 57.67 times less return on investment than Chalice Brands. But when comparing it to its historical volatility, Quanex Building Products is 40.22 times less risky than Chalice Brands. It trades about 0.09 of its potential returns per unit of risk. Chalice Brands is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  0.00  in Chalice Brands on May 20, 2025 and sell it today you would earn a total of  0.01  from holding Chalice Brands or generate 9.223372036854776E16% return on investment over 90 days.

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

Quanex Building Products  vs.  Chalice Brands

Quanex Building Products

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Quanex Building Products are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, Quanex Building showed solid returns over the last few months and may actually be approaching a breakup point.

Chalice Brands

Risk-Adjusted Performance

Weakest

Compared to the overall equity markets, risk-adjusted returns on investments in Chalice Brands are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, Chalice Brands reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Quanex Building and Chalice Brands

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

The idea behind Quanex Building Products and Chalice Brands 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.