Correlation Between Beazer Homes and Auto Trader
Can any of the company-specific risk be diversified away by investing in both Beazer Homes and Auto Trader 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 Auto Trader 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 Auto Trader Group, you can compare the effects of market volatilities on Beazer Homes and Auto Trader 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 Auto Trader. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beazer Homes and Auto Trader.
Diversification Opportunities for Beazer Homes and Auto Trader
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Beazer and Auto is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Beazer Homes USA and Auto Trader Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auto Trader Group 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 Auto Trader. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auto Trader Group has no effect on the direction of Beazer Homes i.e., Beazer Homes and Auto Trader go up and down completely randomly.
Pair Corralation between Beazer Homes and Auto Trader
Assuming the 90 days trading horizon Beazer Homes USA is expected to generate 2.86 times more return on investment than Auto Trader. However, Beazer Homes is 2.86 times more volatile than Auto Trader Group. It trades about 0.1 of its potential returns per unit of risk. Auto Trader Group is currently generating about 0.08 per unit of risk. If you would invest 1,320 in Beazer Homes USA on August 26, 2024 and sell it today you would earn a total of 2,054 from holding Beazer Homes USA or generate 155.61% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 58.13% |
Values | Daily Returns |
Beazer Homes USA vs. Auto Trader Group
Performance |
Timeline |
Beazer Homes USA |
Auto Trader Group |
Beazer Homes and Auto Trader Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Beazer Homes and Auto Trader
The main advantage of trading using opposite Beazer Homes and Auto Trader positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beazer Homes position performs unexpectedly, Auto Trader 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 Auto Trader will offset losses from the drop in Auto Trader's long position.Beazer Homes vs. Batm Advanced Communications | Beazer Homes vs. Edita Food Industries | Beazer Homes vs. Arrow Electronics | Beazer Homes vs. Electronic Arts |
Auto Trader vs. Ondine Biomedical | Auto Trader vs. Europa Metals | Auto Trader vs. Revolution Beauty Group | Auto Trader vs. Biome Technologies Plc |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
Other Complementary Tools
Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
Performance Analysis Check effects of mean-variance optimization against your current asset allocation |