Correlation Between Beazer Homes and Sunny Optical
Can any of the company-specific risk be diversified away by investing in both Beazer Homes and Sunny Optical 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 Sunny Optical 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 Sunny Optical Technology, you can compare the effects of market volatilities on Beazer Homes and Sunny Optical 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 Sunny Optical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beazer Homes and Sunny Optical.
Diversification Opportunities for Beazer Homes and Sunny Optical
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Beazer and Sunny is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Beazer Homes USA and Sunny Optical Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunny Optical Technology 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 Sunny Optical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunny Optical Technology has no effect on the direction of Beazer Homes i.e., Beazer Homes and Sunny Optical go up and down completely randomly.
Pair Corralation between Beazer Homes and Sunny Optical
Assuming the 90 days trading horizon Beazer Homes USA is expected to generate 1.15 times more return on investment than Sunny Optical. However, Beazer Homes is 1.15 times more volatile than Sunny Optical Technology. It trades about 0.08 of its potential returns per unit of risk. Sunny Optical Technology is currently generating about -0.02 per unit of risk. If you would invest 1,622 in Beazer Homes USA on September 19, 2024 and sell it today you would earn a total of 1,544 from holding Beazer Homes USA or generate 95.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 64.98% |
| Values | Daily Returns |
Beazer Homes USA vs. Sunny Optical Technology
Performance |
| Timeline |
| Beazer Homes USA |
| Sunny Optical Technology |
Beazer Homes and Sunny Optical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Beazer Homes and Sunny Optical
The main advantage of trading using opposite Beazer Homes and Sunny Optical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beazer Homes position performs unexpectedly, Sunny Optical 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 Sunny Optical will offset losses from the drop in Sunny Optical's long position.| Beazer Homes vs. Eastman Chemical Co | Beazer Homes vs. Spirent Communications plc | Beazer Homes vs. Liontrust Asset Management | Beazer Homes vs. Charter Communications Cl |
| Sunny Optical vs. Samsung Electronics Co | Sunny Optical vs. Samsung Electronics Co | Sunny Optical vs. Hyundai Motor | Sunny Optical vs. Reliance Industries Ltd |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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