Correlation Between Beazer Homes and Naturhouse Health
Can any of the company-specific risk be diversified away by investing in both Beazer Homes and Naturhouse Health 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 Naturhouse Health 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 Naturhouse Health SA, you can compare the effects of market volatilities on Beazer Homes and Naturhouse Health 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 Naturhouse Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beazer Homes and Naturhouse Health.
Diversification Opportunities for Beazer Homes and Naturhouse Health
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Beazer and Naturhouse is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Beazer Homes USA and Naturhouse Health SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Naturhouse Health 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 Naturhouse Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Naturhouse Health has no effect on the direction of Beazer Homes i.e., Beazer Homes and Naturhouse Health go up and down completely randomly.
Pair Corralation between Beazer Homes and Naturhouse Health
Assuming the 90 days trading horizon Beazer Homes is expected to generate 1.31 times less return on investment than Naturhouse Health. In addition to that, Beazer Homes is 1.65 times more volatile than Naturhouse Health SA. It trades about 0.07 of its total potential returns per unit of risk. Naturhouse Health SA is currently generating about 0.15 per unit of volatility. If you would invest 166.00 in Naturhouse Health SA on October 30, 2024 and sell it today you would earn a total of 6.00 from holding Naturhouse Health SA or generate 3.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 75.0% |
| Values | Daily Returns |
Beazer Homes USA vs. Naturhouse Health SA
Performance |
| Timeline |
| Beazer Homes USA |
| Naturhouse Health |
Beazer Homes and Naturhouse Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Beazer Homes and Naturhouse Health
The main advantage of trading using opposite Beazer Homes and Naturhouse Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beazer Homes position performs unexpectedly, Naturhouse Health 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 Naturhouse Health will offset losses from the drop in Naturhouse Health's long position.| Beazer Homes vs. Vitec Software Group | Beazer Homes vs. JD Sports Fashion | Beazer Homes vs. Software Circle plc | Beazer Homes vs. Kaufman Et Broad |
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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