Correlation Between Applied UV and American Woodmark

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

By analyzing existing cross correlation between Applied UV Preferred and American Woodmark, you can compare the effects of market volatilities on Applied UV and American Woodmark 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 Applied UV with a short position of American Woodmark. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied UV and American Woodmark.

Diversification Opportunities for Applied UV and American Woodmark

-0.37

Correlation Coefficient

Applied UV  American Woodmark

Very good diversification

The 3 months correlation between Applied and American is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Applied UV Preferred and American Woodmark in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Woodmark and Applied UV 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 Applied UV Preferred are associated (or correlated) with American Woodmark. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Woodmark has no effect on the direction of Applied UV i.e., Applied UV and American Woodmark go up and down completely randomly.

Pair Corralation between Applied UV and American Woodmark

If you would invest  3.00  in Applied UV Preferred on September 13, 2024 and sell it today you would earn a total of  0.00  from holding Applied UV Preferred or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

Applied UV Preferred  vs.  American Woodmark

Applied UV Preferred

Risk-Adjusted Performance

0 of 100

Very Weak

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

American Woodmark

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days American Woodmark has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, American Woodmark is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Applied UV and American Woodmark

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

The idea behind Applied UV Preferred and American Woodmark 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.

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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.