Correlation Between Beazer Homes and Freeport McMoRan
Can any of the company-specific risk be diversified away by investing in both Beazer Homes and Freeport McMoRan 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 Freeport McMoRan 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 Freeport McMoRan, you can compare the effects of market volatilities on Beazer Homes and Freeport McMoRan 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 Freeport McMoRan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beazer Homes and Freeport McMoRan.
Diversification Opportunities for Beazer Homes and Freeport McMoRan
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Beazer and Freeport is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Beazer Homes USA and Freeport McMoRan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freeport McMoRan 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 Freeport McMoRan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freeport McMoRan has no effect on the direction of Beazer Homes i.e., Beazer Homes and Freeport McMoRan go up and down completely randomly.
Pair Corralation between Beazer Homes and Freeport McMoRan
Assuming the 90 days trading horizon Beazer Homes USA is expected to under-perform the Freeport McMoRan. In addition to that, Beazer Homes is 2.26 times more volatile than Freeport McMoRan. It trades about -0.44 of its total potential returns per unit of risk. Freeport McMoRan is currently generating about -0.19 per unit of volatility. If you would invest 4,245 in Freeport McMoRan on October 12, 2024 and sell it today you would lose (283.00) from holding Freeport McMoRan or give up 6.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 50.0% |
| Values | Daily Returns |
Beazer Homes USA vs. Freeport McMoRan
Performance |
| Timeline |
| Beazer Homes USA |
| Freeport McMoRan |
Beazer Homes and Freeport McMoRan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Beazer Homes and Freeport McMoRan
The main advantage of trading using opposite Beazer Homes and Freeport McMoRan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beazer Homes position performs unexpectedly, Freeport McMoRan 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 Freeport McMoRan will offset losses from the drop in Freeport McMoRan's long position.| Beazer Homes vs. Walmart | Beazer Homes vs. BYD Co | Beazer Homes vs. Volkswagen AG | Beazer Homes vs. Volkswagen AG Non Vtg |
| Freeport McMoRan vs. New Residential Investment | Freeport McMoRan vs. alstria office REIT AG | Freeport McMoRan vs. Taylor Maritime Investments | Freeport McMoRan vs. Beazer Homes USA |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
Other Complementary Tools
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities |