Correlation Between Beazer Homes and Gaztransport
Can any of the company-specific risk be diversified away by investing in both Beazer Homes and Gaztransport 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 Gaztransport 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 Gaztransport et Technigaz, you can compare the effects of market volatilities on Beazer Homes and Gaztransport 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 Gaztransport. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beazer Homes and Gaztransport.
Diversification Opportunities for Beazer Homes and Gaztransport
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Beazer and Gaztransport is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Beazer Homes USA and Gaztransport et Technigaz in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gaztransport et Technigaz 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 Gaztransport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gaztransport et Technigaz has no effect on the direction of Beazer Homes i.e., Beazer Homes and Gaztransport go up and down completely randomly.
Pair Corralation between Beazer Homes and Gaztransport
Assuming the 90 days trading horizon Beazer Homes USA is expected to generate 2.46 times more return on investment than Gaztransport. However, Beazer Homes is 2.46 times more volatile than Gaztransport et Technigaz. It trades about 0.1 of its potential returns per unit of risk. Gaztransport et Technigaz is currently generating about 0.05 per unit of risk. If you would invest 1,364 in Beazer Homes USA on September 4, 2024 and sell it today you would earn a total of 2,104 from holding Beazer Homes USA or generate 154.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 57.63% |
| Values | Daily Returns |
Beazer Homes USA vs. Gaztransport et Technigaz
Performance |
| Timeline |
| Beazer Homes USA |
| Gaztransport et Technigaz |
Beazer Homes and Gaztransport Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Beazer Homes and Gaztransport
The main advantage of trading using opposite Beazer Homes and Gaztransport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beazer Homes position performs unexpectedly, Gaztransport 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 Gaztransport will offset losses from the drop in Gaztransport'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 |
| Gaztransport vs. Darden Restaurants | Gaztransport vs. Silvercorp Metals | Gaztransport vs. Neometals | Gaztransport vs. STMicroelectronics NV |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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