Correlation Between Beazer Homes and Eastman Chemical
Can any of the company-specific risk be diversified away by investing in both Beazer Homes and Eastman Chemical 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 Beazer Homes and Eastman Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Beazer Homes USA and Eastman Chemical Co, you can compare the effects of market volatilities on Beazer Homes and Eastman Chemical 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 Beazer Homes with a short position of Eastman Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beazer Homes and Eastman Chemical.
Diversification Opportunities for Beazer Homes and Eastman Chemical
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Beazer and Eastman is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Beazer Homes USA and Eastman Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastman Chemical and Beazer Homes 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 Beazer Homes USA are associated (or correlated) with Eastman Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastman Chemical has no effect on the direction of Beazer Homes i.e., Beazer Homes and Eastman Chemical go up and down completely randomly.
Pair Corralation between Beazer Homes and Eastman Chemical
Assuming the 90 days trading horizon Beazer Homes USA is expected to generate 2.69 times more return on investment than Eastman Chemical. However, Beazer Homes is 2.69 times more volatile than Eastman Chemical Co. It trades about 0.17 of its potential returns per unit of risk. Eastman Chemical Co is currently generating about 0.13 per unit of risk. If you would invest 3,150 in Beazer Homes USA on September 4, 2024 and sell it today you would earn a total of 318.00 from holding Beazer Homes USA or generate 10.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 76.19% |
| Values | Daily Returns |
Beazer Homes USA vs. Eastman Chemical Co
Performance |
| Timeline |
| Beazer Homes USA |
| Eastman Chemical |
Beazer Homes and Eastman Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Beazer Homes and Eastman Chemical
The main advantage of trading using opposite Beazer Homes and Eastman Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beazer Homes position performs unexpectedly, Eastman Chemical 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 Eastman Chemical will offset losses from the drop in Eastman Chemical's long position.| Beazer Homes vs. Public Storage | Beazer Homes vs. Alliance Data Systems | Beazer Homes vs. Gamma Communications PLC | Beazer Homes vs. Ecofin Global Utilities |
| Eastman Chemical vs. Samsung Electronics Co | Eastman Chemical vs. Samsung Electronics Co | Eastman Chemical vs. Hyundai Motor | Eastman Chemical vs. Toyota Motor Corp |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
Other Complementary Tools
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation |