Correlation Between Beazer Homes and Albion Technology
Can any of the company-specific risk be diversified away by investing in both Beazer Homes and Albion Technology 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 Albion Technology 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 Albion Technology General, you can compare the effects of market volatilities on Beazer Homes and Albion Technology 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 Albion Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beazer Homes and Albion Technology.
Diversification Opportunities for Beazer Homes and Albion Technology
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Beazer and Albion is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Beazer Homes USA and Albion Technology General in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Albion Technology General 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 Albion Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Albion Technology General has no effect on the direction of Beazer Homes i.e., Beazer Homes and Albion Technology go up and down completely randomly.
Pair Corralation between Beazer Homes and Albion Technology
Assuming the 90 days trading horizon Beazer Homes USA is expected to generate 5.67 times more return on investment than Albion Technology. However, Beazer Homes is 5.67 times more volatile than Albion Technology General. It trades about 0.1 of its potential returns per unit of risk. Albion Technology General is currently generating about 0.02 per unit of risk. If you would invest 1,364 in Beazer Homes USA on September 3, 2024 and sell it today you would earn a total of 2,141 from holding Beazer Homes USA or generate 156.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 57.55% |
| Values | Daily Returns |
Beazer Homes USA vs. Albion Technology General
Performance |
| Timeline |
| Beazer Homes USA |
| Albion Technology General |
Beazer Homes and Albion Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Beazer Homes and Albion Technology
The main advantage of trading using opposite Beazer Homes and Albion Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beazer Homes position performs unexpectedly, Albion Technology 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 Albion Technology will offset losses from the drop in Albion Technology's long position.| Beazer Homes vs. Herald Investment Trust | Beazer Homes vs. New Residential Investment | Beazer Homes vs. Hansa Investment | Beazer Homes vs. Veolia Environnement VE |
| Albion Technology vs. Monks Investment Trust | Albion Technology vs. Herald Investment Trust | Albion Technology vs. Neometals | Albion Technology vs. Wheaton Precious Metals |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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