Correlation Between United Internet and Beazer Homes
Can any of the company-specific risk be diversified away by investing in both United Internet and Beazer Homes 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 United Internet and Beazer Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Internet AG and Beazer Homes USA, you can compare the effects of market volatilities on United Internet and Beazer Homes 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 United Internet with a short position of Beazer Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Internet and Beazer Homes.
Diversification Opportunities for United Internet and Beazer Homes
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between United and Beazer is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding United Internet AG and Beazer Homes USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beazer Homes USA and United Internet 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 United Internet AG are associated (or correlated) with Beazer Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beazer Homes USA has no effect on the direction of United Internet i.e., United Internet and Beazer Homes go up and down completely randomly.
Pair Corralation between United Internet and Beazer Homes
Assuming the 90 days trading horizon United Internet AG is expected to under-perform the Beazer Homes. But the stock apears to be less risky and, when comparing its historical volatility, United Internet AG is 1.78 times less risky than Beazer Homes. The stock trades about 0.0 of its potential returns per unit of risk. The Beazer Homes USA is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,364 in Beazer Homes USA on September 2, 2024 and sell it today you would earn a total of 2,141 from holding Beazer Homes USA or generate 156.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 57.31% |
| Values | Daily Returns |
United Internet AG vs. Beazer Homes USA
Performance |
| Timeline |
| United Internet AG |
| Beazer Homes USA |
United Internet and Beazer Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Internet and Beazer Homes
The main advantage of trading using opposite United Internet and Beazer Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Internet position performs unexpectedly, Beazer Homes 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 Beazer Homes will offset losses from the drop in Beazer Homes' long position.| United Internet vs. Ashtead Technology Holdings | United Internet vs. Foresight Environmental Infrastructure | United Internet vs. Microchip Technology | United Internet vs. JD Sports Fashion |
| Beazer Homes vs. Medical Properties Trust | Beazer Homes vs. Lindsell Train Investment | Beazer Homes vs. HCA Healthcare | Beazer Homes vs. MyHealthChecked Plc |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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