Correlation Between Beazer Homes and Poxel SA
Can any of the company-specific risk be diversified away by investing in both Beazer Homes and Poxel SA 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 Poxel SA 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 Poxel SA, you can compare the effects of market volatilities on Beazer Homes and Poxel SA 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 Poxel SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beazer Homes and Poxel SA.
Diversification Opportunities for Beazer Homes and Poxel SA
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Beazer and Poxel is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Beazer Homes USA and Poxel SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Poxel SA 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 Poxel SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Poxel SA has no effect on the direction of Beazer Homes i.e., Beazer Homes and Poxel SA go up and down completely randomly.
Pair Corralation between Beazer Homes and Poxel SA
Assuming the 90 days trading horizon Beazer Homes USA is expected to generate 0.56 times more return on investment than Poxel SA. However, Beazer Homes USA is 1.78 times less risky than Poxel SA. It trades about 0.01 of its potential returns per unit of risk. Poxel SA is currently generating about -0.03 per unit of risk. If you would invest 3,338 in Beazer Homes USA on September 14, 2024 and sell it today you would lose (172.00) from holding Beazer Homes USA or give up 5.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 58.17% |
| Values | Daily Returns |
Beazer Homes USA vs. Poxel SA
Performance |
| Timeline |
| Beazer Homes USA |
| Poxel SA |
Beazer Homes and Poxel SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Beazer Homes and Poxel SA
The main advantage of trading using opposite Beazer Homes and Poxel SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beazer Homes position performs unexpectedly, Poxel SA 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 Poxel SA will offset losses from the drop in Poxel SA's long position.| Beazer Homes vs. Samsung Electronics Co | Beazer Homes vs. Samsung Electronics Co | Beazer Homes vs. Hyundai Motor | Beazer Homes vs. Reliance Industries Ltd |
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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